In no way the online market can or should replace traditional ways of trading. However, the rapid emergence of eCommerce is not only reshaping marketing and sales model, but also bringing the service standard to a new high (e.g. Amazon one-day delivery).The questions I want ask would be
- What are the new rules?
- What opportunities bring to different players?
E-commerce is by no means limited to consumer products
Industry sales can dig out its own benefits. In 2002 Dow Corning realized that many customers were asking for an easier and more affordable way to buy the standard silicones they need; so they launched new business model called Xiameter, comprising an online-managed and low-cost sales channel for its commodity silicones, offering competitive pricing to customers willing to buy in bulk, without research or technical support[1][2].
What is the basic change with e-commerce model?
With traditional channel sales or direct sales models, we segregate customer into fixed groups, find the suitable channel, build robust processes and leverage on service as well as scalability for profit.
E-commerce is not fundamental game changer. But it crushes down the barriers in trading to enable many talking-to-many; therefore, it can better support customized needs and free people to do more value adding things. “People” here means anyone in the value chain, from shopping convenience cause consumers can buy whatever and whenever they what, to supplying convenience cause seller can focus on design with customer self-service.
How to position the e-commerce channel in the big picture?
It’s still started from customer and working backward. The basic questions remain the same with the new channel.
- Who is the target customer?
- What is the demand pattern?
- What kind of local customization customer may require?
- What kind of support the sales needs?
- What the decision makers would be for getting sales done?
- How to design the touch point?
- How to deploy salesforce?
Dell deploys customized high-end PCs on-line and Dow Corning offers customers specialties silicones backed up by technical support and R&D off line.
How to run the channel?
Before we answer the question, we need to look at the end-to-end processes and who are the game players in the value chain.
We have:
- E-commence companies like Amazon and Lazada
- Traditional retailers like Walmart and Courts
- Independent sellers like Apple and Jcrew
However, in the battlefield of e-market, all the boundaries become blur, anyone can do anything. Amazon recruits sellers around the world and provide fulfillment service to seller leveraging on its supply network, technologies and traffic flow. Singapore Post goes for another track, it not only serves as a middleman for consumers to ship the oversea online shopped goods to Singapore, but also partners with brands to launch and manage their online stores across Asia-Pacific. I call them e-commerce enablers, who provide service to ecommerce business.
All the players in the game should think end-to-end as well as their own strength. Sellers need to choose partners smartly by asking questions like:
- What is your core business?
- Which area you are weak? How to close the gap?
- How do you want to manage consumer experience?
- What is your supply chain strategy in terms of responsiveness, service and cost?
For e-commence enablers, yes, there are a lot of opportunities; but you need to really solve pain in the ass and find out who is your service target.
Singbada, an interesting case study and a B2B e-commerce enabler for fashion
China has very mature garment production industry; however it’s more suitable for large orders and long lead-time. Raw material and intermedium products are processed in big batches from step to step. It’s talking about thousands of pieces per order and weeks as planning unit.
Singbada [3] provides a solution for small-order rapid production requirement coming from e-commerce. It changes the production approach from batch into piece; manage production plant as modules to get agility; therefore it can support 50-piece production per order and deliver within 7 days.
I have similar idea 2 years ago because I really enjoy shopping online from those independent designers but the long lead-time always let me drop the orders. Well, idea means nothing and actions deliver results.
Conclusion
While there are new rules with eCommerce and challenges from running multi-channels online offline, the basic remain the same: rethink the channel strategy and build the new supply chain capabilities to survive in the information age.
- [1] http://www.xiameter.com
- [2] Mckinsey on Chemicals, Spring 2012
- [3] http://www.singbadainside.com
Thinking Really Matters 