Direct-to-Customer Commerce

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Strategic insights into the direct commerce industry, including ecommerce, direct marketing and related fields

What I see in the crystal ball?

Direct commerce operations is certainly a diverse marketplace. Especially because of range of businesses which fall within its boundaries. And this range is defined, at the very least by these factors:

  • the size of the business, whether measured in dollars or transactions
  • the management philosophy of owners or corporate leadership
  • the existing assets of the business

Interestingly, there seems to be little persistent consistency among how companies involved in direct commerce handle their operations requirements.

Some large companies run it in-house and some outsource it. Most very small companies have to run it themselves, because they’re too small for an outsourcer to take them on. Mid-sized companies go both ways as well.

And every company I’ve ever worked with wants to get some outsourcer to assume as much of the risk as possible, without fair compensation for the risk they take on.

But with all that said, I think we’re going to see three things happen more often in the next few years:

Hosted order management applications

There is a lot to be said for having control of your order management system. Unfortunately, many on the marketing side, so not fully appreciate the importance of the OMS to the customer care function and to the marketing analytics function.

But OMS’ are very complex systems and require more attention and more experience than most companies have or can buy. Many OMS systems I’ve examined closely still don’t handle the FTC Mail Order Rule properly.

As a result, I’m encouraging client to look at hosted solutions for the OMS. There are a few out there. And in many situations, they are the best available solution.

Separated DC & CC operations

For sometime, there has been somewhat of a working assumption that it was best if the distribution center operations and the customer contact center operations were managed under a single roof — at least for direct commerce purposes.

The problem this sometimes results in is that sometimes, the companies who you can get both services, can’t scale both operations adequately to meet peak season volumes.

Separating these operations to outsourced solutions who specialize enable you to use larger service providers with more diversified resources to manage peak.

One-stop shops will continue to serve a narrowing market

One-stop shops, by definition, provide order management, distribution and customer care services. There are many small operations around the country. A much smaller number provides services to mid-sized businesses which want to outsource. An even smaller number provide services to very large companies who want their direct commerce operations run outside of their normal distribution / customer service operation.

Due to the overall mediocre performance of many of these one-stop shops, the market for their services is going to continue to decline.

I’m curious to know if you see things differently.

Filed under: Direct Commerce, Uncategorized

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