Direct-to-Customer Commerce

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

9 Components of Successful Direct Commerce

These are the nine component systems, which should be in place, to execute a successful direct-to-customer retail commerce strategy.  The order is significant in only one point — marketing should be last.  But I’ve found this sequence is generally correct

  1. product master
  2. order management system
  3. single view of inventory
  4. warehouse management system
  5. product delivery
  6. content management system
  7. customer service
  8. web store
  9. marketing

In addition, this applies to e-commerce, brick-and-mortar, mobile, catalog — this is the infrastructure you need.

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Filed under: Direct Commerce, multichannel commerce, Omni-Channel Commerce, , ,

The Challenges of Direct-to-Customer Commerce

Where the market is today 

  • Direct-to-customer sales are growing faster than retail overall
  • The most profitable customers buy through multiple channels – store, catalog, online
  • Customers want a uniform brand experience across all channels
  • Debate of Sales/Use tax nexus and collections
  • Impact of shipping cost on order size, shopping cart abandonment
  • Advertising revenue for radio, newspaper is declining, while online ads are nearly sold out – based largely on the ability to target customers
  • Brands adapt to fit the direct-to-customer space

Where the market is going 

  • Channel conflict is losing its influence
  • As affluence increases, the importance of convenience grows
  • Direct-to-customer channel will continue to grow
  • Customers expect a online presence where they can research and buy
  • Customers expect to interact with the brand via email or online
  • Customers will post their opinions and stories about your brand online where everyone can read them
  • Merchants are still learning the nuances of customer acquisition, customer retention, life-time-value, and share-of-customer – all well established principles of direct marketing.

The problems of getting there…do it myself or outsource 

  • Running a direct-to-customer business is different than running a wholesale business or retail-store-based business.
    • Direct-to-Customer distribution is a different skill set than retail distribution
    • Assorted SKU cases v. unique SKU cases
    • Case picking v. Item picking
    • Residential delivery v. Commercial delivery
    • Merchandise planning
    • Demand planning & forecasting
    • Daily shipping deadline (when the truck pulls away)
    • Package presentation/merchandise presentation is important
  • Direct-to-Customer care is a different process than in-store service
    • Pre-sale product inquiries — what do these really look like and feel like?
    • Where is my order?
    • Returns & Exchanges
    • Anywhere, anytime
  • Direct-to-Customer technical systems operate on a different scale and at a different speed than retail systems
  • More exceptions, because we have less influence over customer behavior
  • Systems must support unexpected customer requests
  • Order volumes can be thousands per day, rather than hundreds per week
  • Pure volume of data explodes
  • Systems must be scaled and optimized to support intraday peaks of calls, orders, shipments
  • Use of multiple payment options especially the use Stored Value cards with credit cards.
  • Ability to customize marketing offers beyond the basic free shipping.

What you need to get there 

  • Execution expertise in the direct-to-customer supply chain
  • The ability to expand on short notice
    • Key stats on orders handled, calls answered, shipped sales, shipments
    • Network map
  • The ability to adapt your processes to support your brand
    • Technical integrations to web sites, ERP systems, data warehouses
  • Monitor and manage to meet or exceed your target Service Levels, improving customer satisfaction
  • Persistent effort to improve your processes and lower expenses

Filed under: Direct Commerce, multichannel commerce, Omni-Channel Commerce

Nine Steps to Multichannel Commerce

Nine Steps to Multichannel Commerce

This is a PDF copy of a presentation on the major necessary steps to fully implement a multichannel commerce strategy, which is required precursor to an Omni-Channel strategy

 

Filed under: Direct Commerce, multichannel commerce, , , ,

Is show rooming a problem?

Well clearly, it is for some brick & mortar retailers.  At least they think it is.  It’s even reached the pages of the NYTimes (subscription required).

The NYTimes article even postulates that retail merchants should prepare a script of what to say when they catch customers using their store as a show room.

This is a losing battle.

Customers are going to use your store for a show room … at least if you’re selling products where there is a lot of content, a lot of price competition, or the products are simply expensive in the eyes of your prospective buyer.  You cannot stop it.

But you can combat it … but only by differentiating your business from the competition:

  • provide better prices
  • provide better customer service
  • provide a better guarantee
  • provide training
  • provide more information (content)

If you think show-rooming is bad now, this is only the start.  Younger buyers are ever more dependent upon their smart phones.  As they continue and increasingly dominate the buying public, show-rooming will become more and more prevalent.

This is a disruptive pattern.  Consider yourself disrupted.

Now what are you going to do about it.

Filed under: multichannel commerce, Omni-Channel Commerce, Opinion, , , , , , , ,

Axle Digital Announces Launch of Grand Central Commerce Platform for Multi-Channel and Social Commerce | Virtual-Strategy Magazine

Axle Digital Announces Launch of Grand Central Commerce Platform for Multi-Channel and Social Commerce | Virtual-Strategy Magazine.

This is an interesting develop … the continuing integration of social media into the marketing mix, especially, the marketing automation mix.  This is especially worth reviewing, if your target demographic is on the younger side … < 30.

Check it out and let me know what you think.

Filed under: multichannel commerce, , , , ,

9 Steps to Multichannel Commerce

This is a slide deck, which I produced and uploaded to slideshare.net.  Click here.

Filed under: multichannel commerce, , , , , , , , , ,

Cash registers fade away as smartphones, tablets take over

This trend was very foreseeable.  And anyone who doesn’t see it, needs to re-evaluate.  Here’s a link the this story by the AP, published by Gannett … Link

Note even Walmart is experimenting with an iPhone app that enables a shopper to scan items as the shopper drops them into her cart.  Stopping at a self-check-out terminal only to pay and perhaps bag up the items.

And if you’ve never used the “self-pay” function in Apple’s Store app, you should try it.  Scan an item, login with your Apple ID, pay with your registered credit card, email yourself the receipt and walk out of the store.  You can do it with any item that is not stored in the back of the store (which includes the big, very valuable items, as you would expect).

Once again, we talking about convenience to the customer … it’s a never-ending theme, but I’m always amazed at how few people get it.

Personally, I’m waiting for my grocery store to allow me to email my receipt … I hate those long pieces of paper!

Filed under: Ideas, multichannel commerce, News, Opinion, , , , , , , ,

The Impact of Omni-channel on Retail

The Wall Street Journal published a story this week about Macy’s, which focuses mostly only the perceived impact that an omni-channel strategy is having on their business, going forward.  It’s worth reading here. (subscription required)

What struck me in this story is the twist on the concept of localization.

Most of my conversations with ecommerce folks, in which “localization” comes up, the subject is a reference to localizing a web site to a country.  And, of course, the resulting need for translation, alternate payment processing methods, separating inventory, separating marketing campaigns.  All to be expected.

What Macy’s professes to recognizing is that a store in Fairfax, Virginia (where I live) may demand a different inventory and different marketing than a store in Dallas, Texas.

Now, we’ve all recognized those type of differences — up to a point.

But with the tools available to us now, we can buy uniquely for each store, vary marketing by micro-segment, and attempt to match available inventory (and by extension our merchandising & buying tactics) to these clearly identifiable segments.

But where is the balance … can we focus one segments that are so small, we cannot manage to them profitably? And if that’s true, then what is the smallest segment we should isolate to maximize profitability?

A whole new form of optimization!

 

Filed under: Direct Commerce, Ideas, multichannel commerce, Opinion, , , , , , , , , ,

More on Same Day Delivery

Anyone engaged in ecommerce operations is probably following the trade press reports on same-day-delivery.

It’s a gee-whiz offer, but does it increase sales?  Is it profitable?  Is it cost-effective?

For some merchants, it makes all kinds of sense.  In fact, for some, such as florists, it’s almost a requirement.  It makes sense even for office supply stores, and some high-end merchants — Macy’s, Nordstrom and similar companies.

All of these companies have inventory widely dispersed and can take advantage of local courier services or even, as in the case of most florists, have their own existing delivery infrastructure.

But what about everyone else?

Here’s an interesting story from StorefrontBacktalk.com, reporting on Amazon’s recent experience.  It reports that Amazon saw a conversion increase of 20-25% when they offered same-day-delivery,  but few of customers actually asked for same-day-delivery.

Demonstrating a great point:  Marketing is one-thing, but what customers actually want, need or use may be another.

Now, you just have to figure out where you fit on this new paradigm.

Filed under: Direct Commerce, Ideas, multichannel commerce, Opinion, , , , , , ,

Customer Engagement v Customer Service

I’m going to write about this again later, but here’s a link to a blog post by Seth Godin on Customer Service.  It’s entitled, The only purpose of ‘customer service’.

He makes a great point about customer service, so contemplate what he says about customer service.  Then, consider how, when talking about social media and marketing, so many people are discussing customer engagement.

I don’t mean to infer that customer engagement is the same thing as customer service.  I don’t think it is.  But I probably do think customer service is more important than customer engagement.

We’re using words in marketing these days, which suggests we can create a nearly intimate relationship between a business and its customers.  And I think that borders on the ridiculous.

I admit, I’m a real fan of Five Guys, a franchise that sells hamburgers and fries.  Their second store is right near my home and I’ve been eating there for a long time.  But I remain a fan, because their burgers remain among the best I eat.  And they’re a good value, from a price point of view.  So, I’m a fan because they continue to provide me a good product at what I consider a good price.

When they fail to do that, they may lose me as a fan.

If you want to set customer engagement as a goal for your company … go for it.  But only after you get everything else correct, first.

Filed under: Direct Commerce, multichannel commerce, Opinion, , , , , ,

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