Behind an enviable growth, e-commerce is an industry making little money! Because of:
- two e-commerce websites are created every hour
- gross profit is tiny, except if you integrate the complete value chain
- digital production + logistics + marketing is extremely costly. Cost of customer acquisition is growing and conversion rate is decreasing
- repeat purchase doesn’t happen so often, even at Amazon (only 3 times per year, and when you recognize they have a huge inventory… that’s scaring for e-commerce players!)
Customers are mutants, changing much quicker than merchants do. Why? Because customers are
- seamless (offline vs online: people don’t care anymore). Customer just want a relation with a brand following the following acronym: “ATAWAT = Any Time, AnyWhere, Any Time”
- over social
- seeking for attention
What’s the impact on business? As an e-commerce player, you have to be
- available 24/7
- able to upgrade customer service (providing value for money, as it’s increasingly difficult to provide the best price)
Customers have changed their behaviors and merchants have to adapt quickly… or die.
Amazon as un unfair competitive advantage… because it
- makes a yearly turnover of EUR 48bio with a +41% growth… so more than 10% of worldwide e-commerce
- is the most customer-centric company in the world
- is a logistics company combined with strong empathy, huge analytics capabilities and is acting frugal
- can afford to lose 2 bios (!) per year on logistics…
- is operating in Europe from Luxembourg (with a VAT of 3%, which is massively deeper as European countries)
- who can outperform it?
Is there range for pure players to survive?
- on top100 e-commerce websites, only 4% turnover is generated by pure players
- e-commerce is a distribution channel representing +/- 10% of the entire retail turnover, meaning that online commerce is still a niche in the retail industry
- pure players have 3 options: partner with another pure player, being purchased by a retailer, buy out/open retail stores
- to survive, they need to combine a strong brand, a distinctive USP, a real passion for customers, good prices on sourcing products, a rentable business (CLTV (Customer Life Time Value) > CAC (Customer Acquisition Cost)
Strangely, I had the impression that the keynote speaker from LaPoste.fr was afraid by the 2 first options for pure e-commerce players. But what’s the problem to partner or be bought by another player? It means an EXIT opportunity for the founders and investors… So in the startup ecosystem, what’s wrong?
What remains for offline retailers?
- they still have strong advantages: reputation, good at sourcing, customer knowledge
- but they face new difficulties: not enough digital culture of the management or organization of the company
The challenge of local commerce: you still hear “e-commerce will kill us”. But how can they handle the change?
- overcome the fear, transform it in curiosity!
- mobile solutions could be the mean to change acceptation of e-commerce by local merchants
Mobile is a huge opportunity to widen the penetration of e-commerce.
- Applications over mobile web over desktop
Is there a social crisis?
- social web is dead WITHOUT content!
- customer generated content – nrand content is the new black
- social commerce: the only thing constant in business is… change
- companies are opening an overwhelming number of corporate accountstrend: social retailing + digital = experience accelerator
- to be heard on social, you will pay. Soon, you won’t be able to tell the difference between content and ads
- innovations of today will be common tomorrow
- there is a wide range for creativity and for improving the user experience
How to get analytics across channels, devices, etc.? Challenges are
- how to measure multi channels analytics?
- how to define an unique product ID, CRM program, experience?
- what tools to better measure Return On Engagement?