The power of eCommerce

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The power channel processes an estimated 70 percent of its business over the internet, but OP independents average just 25 percent. Here OPI details the advantages of eMarketing and online commerce and lays out an action plan to help the dealer community close the gap.

 

According to Krista Fleet of K Coaching and OPWebinars, "selling internet ordering is a great retention strategy as well as a must-have for the future". She believes independent dealers should create a plan of action as part of their growth strategy, and outlines how to keep up with the changes: 

  • Invent a retention strategy – once customers start to use your online system, they get comfortable and accustomed. If it is a large account out to bid, they will consider the learning curve and cost of change in their evaluation bid. "I hear of situations where an account switches to the power channel because of a lack of awareness about the independent’s internet ordering system", says Fleet.
  • Be aware, buyers are changing. "Future buyers will be used to ordering online and will have perhaps never even heard of an independent dealer." 
  • Keep up with the power channel and develop an easy method for ordering. "The gap is too large to ignore, especially with the big boxes moving more into the mid-market." 
  • Make use of increased margins and flexible prices. "Customer statistics reveal margins can be as much as three percent higher on internet orders."
  • Maximise selling time. "It’s not uncommon for independent sales reps to spend the majority of their time processing orders – this becomes obsolete with online ordering, which leaves more time available to secure new business."

"Independent sales reps often tell me that their customers don’t want to order online – they like the personal attention that comes with telephone ordering. This is very short-sighted, especially when the decision to order electronically is often made at a higher level." 

 

Fleet says that implementing a strong eCommerce plan will take the strengths of the personal attention, dedicated service and relationship to another level. "The power channel is not equipped to have dedicated sales staying close to the internet ordering customer," she says. "But the independent dealer can. They should capitalise by combining both dedicated sales and technology."

 

Fleet has developed a simple ‘how to’ scheme to start integrating eCommerce into the dealer’s business model. She urges all dealers looking to launch or upgrade their eCommerce platform to know the system inside and out, and be able to sit at a customer’s desk and take them through the important details. According to Fleet a successful eCommerce growth strategy should contain the following objectives:

  • Uncover areas of opportunity for eCommerce from targeted accounts. These targets should be:
    (i) Accounts that are set up to order on the internet, but are not using it
    (ii) Problem customers and high-maintenance accounts
    (iii) Identify top 10 revenue-generating accounts that are not using internet ordering by rep
  •  Create a target list by sales team
  • Introduce a system to support the effort through assistance with sales support
  • Establish a higher-level client relationship
  • Introduce eCommerce as a retention strategy
  • Sell value-added and advantages that meet the customers’ needs.

Fleet says: "This retention strategy is focused on the training and development of the reps to be able to sell the value add-ons of online ordering and to increase the number of customers using the internet. It can supercede the competition by integrating internet ordering into existing accounts, as well as retaining customers who have invested the time to learn the product and are comfortable using the system.

 

"We believe that this will create operational efficiency in data entry, fewer errors, larger average order size, and a means for penetration into existing accounts. There is margin enhancement opportunity through getting the customers to check pricing online rather than calling in for a quote."

 

What’s ahead in 2007

 

Website optimisation, customer-based product promotion, alternative payment methods, mergers and "product discovery" are the big online retail trends for this year, according to a recent Forrester research report by eCommerce analyst Sucharita Mulpuru.

 

In her report, Trends 2007: Ecommerce and Online Retail Mulpuru states: "Specifically, we expect significant efforts in 2007 to focus on the improvement of Web site operations, the integration of non-credit-card payment vehicles and the enhancement of the product discovery process. Additionally, the coming year will reflect the voice of the customer as a sales tool for products more clearly than it has before."

 

The landmark report highlights the following key areas…

 

Website operations will receive overdue attention. Monitoring website performance, (download speed etc.) is no longer just for large businesses. Dropping price points, with some companies offering metrics services for as little as $500 a month, is allowing small eTailers to incorporate these tools into their business operations.

 

Non-traditional payment methods will continue to grow. After steady gains in 2006, non-creditcard payment is expected to continue to grow this year. Though credit cards are still used for the majority of non-eBay purchases, alternatives such as Bill Me Later, Google Checkout and PayPal will gain market share as they give customers "flexibility, float, and even credit", according to the report. "Likewise, retailers are also likely to experience a boon by potentially converting consumers who otherwise would not have made a purchase and by paying lower merchant interchange rates to alternative payment processors, versus the hefty rates that online merchants pay to networks like MasterCard and Visa."

 

Product "discovery" will become a new buzzword. The thrill of finding a product that you either didn’t know existed or exceeds expectations because it’s super-personalised or uncommon is fuelling the niche/discovery trend. Forrester estimates that there are 650,000 sole-proprietorship online stores that sell roughly $13 billion of merchandise and that consumers love the vast selection offered by these sites, with nearly 60 percent of web shoppers saying that the internet gives them an opportunity to find products that they would not find elsewhere. While niche sites continue to thrive in part through advancements in organic search and a more mature market, the report says companies such as Gifts.com and Zafu are also playing a role by offering tools to facilitate "discovery" search, providing more guided, personalised searching and results.

 

Small players

 

More manufacturers will venture online, selling directly to consumers, according to the report, which cites Callaway Golf as an example. This company takes orders on its website, but fulfils them through one of its retailers to solve the shipping problem, resulting in a "win-win-win for the manufacturer, retailer and customer.

 

Consolidation in the long tail is imminent. Small eTailers currently comprise roughly one-fourth of online retail revenues, resulting in a profusion of small websites eating up margins and valuable shelf space on key marketing pages, states the analyst in the report. This will likely spur consolidation: "By aggregating small players in key categories, larger companies could consolidate their lead, learn some of the secrets of scrappy marketing and boost margins," according to the study. "Two such consortiums that exist by executing exactly this model are NetShops and Niche Retail, the latter of which owns sites like Joggingstroller.com."

 

The consumer voice will be louder than ever in the online shopping experience. Customer reviews are no longer the only shopper-centric content driving sales. "Blogs, podcasts, tags and even user-generated products and product configurators all promise to push user-generated content above and beyond the current product testimonials," states the report. Examples of successful initiatives include Buy.com, among the first sites to post video testimonials of products, and Threadless and Metropark, which invite customers to submit product designs for items like T-shirts, the best of which they make and sell online.

 

Nearly the entire dealer community has a website, but maybe it is time to start looking at a redesign and relaunch to incorporate some of the points mentioned in this feature.

 

Winning websites

 

Here’s OPI‘s ten-point plan on how to refresh and enhance your website:

 

Step one: Determine what it is you don’t like about your existing Web site. Look at completing a design questionnaire, find websites you like in terms of functionality and design. Steer away from using Flash and graphical buttons on the site as these often annoy prospective customers and cannot be detected by some ‘search engine spiders’.

 

Step two: Come up with a basic strategy, which you should continue to refine with your design team. Always remember who you’re communicating with, what you want your visitors to do on the site and how it will be maintained once it’s built.

 

Step three: Create a budget and stick to it. This kind of project can grow a life of its own. Be realistic with your ideas, otherwise you will only delay that vital return of investment.

 

Step four: Don’t do it yourself. Unless web design is your area of expertise, hire great people whose business it is to help you bring your vision to life.

 

Step five: Involve your customers. Make sure that your customer base, or at least key accounts, have the opportunity to be part of the development process and provide feedback on an ongoing basis.

 

Step six: Don’t be discouraged. Have fun during the process and don’t allow day-to-day glitches to get you down.

 

Step seven: Test the new site before you go live. Having a few good customers test the site pre-launch could save you a lot of heartache and money.

 

Step eight: Don’t rush. Take your time and look at each function or design properly. Think about whether it will still be as attractive in five years’ time? Look closely at making the site future-proof.

 

Step nine: Double your timeline. It always takes longer than you think to achieve the results you want – and that’s okay.

 

Step ten: Enjoy the rewards. Once implemented, sit back and congratulate yourself on a good job, well done. Now watch those margin increases.

 

In The Top 500 Guide to Retail Websites, published by Internet Retailer, office supplies constituted 40 percent of the list.

 

Web-only merchants grew sales by 49 percent, compared to the cataloguers with 40 percent growth, followed by the retail chains at around 27 percent. Large retailers still accounted for 40 percent of all online office products sales.

 

Online advantages

 

Last month, Staples reported annual eCommerce sales of $4.9 billion, a 28 percent year-on-year increase and US wholesaler SP Richards recently announced it had relaunched its online product information website, iteminfo.com.

 

And the manufacturers are swiftly catching up with the advantages of a comprehensive online strategy. Head of marketing at HSM, Stefan Schraff, tells OPI: "Our website is the central information platform for customers. We have recently established several tools to ease and increase communication with and for our partners and customers. These include a customer forum, our marketing platform, which has all kinds of specific information, a merchandising shop, and a sales support platform – with additional, exclusive sales and service tools.

 

"We view the internet as a hugely important tool. The platform is the central and leading communication medium for the whole marketing launch campaign of the new product line."