eCommerce & Digital Transformation for Merchants in a post-Covid World

On 10th Feb 2021, Andy Scothern of eCommonSense hosted a webinar run by the BMF about the role of ecommerce and digitalisation for merchants, both throughout and beyond Covid.

The impact of the pandemic in accelerating the demand for and take-up of ecommerce is undisputed, but what stands out is that the changes it has brought about look set to have shifted the entire landscape of merchanting sales permanently – and that digitisation needs to be a big focus for merchant strategy.

In it for the long haul

The shift to online sales is nothing new for retailers, but traditional merchants have not had the same degree of adoption – until now. Customer expectations and shopping habits are changing rapidly, and the message is coming through loud and clear that merchants not incorporating a digital strategy are going to get left behind.

This is not a short-term or knee-jerk reaction. The statistics show that while there is an initial surge in online sales caused directly by the Covid pandemic and various national lockdowns, this is not a one-off anomaly. Instead, it is a step change in customer behaviour and the ongoing rise in sales demonstrates that the trend is here to stay.

According to figures quoted from the March 2020 MIT Technology Review, online sales have doubled every year since 2017; and the UK is the third largest ecommerce market in the world. A whopping 67% of millennials actively prefer to shop online to bricks and mortar, and 56% of gen-X feels the same way. Nearly half (48.8%) of shoppers said they would shop online more frequently once the outbreak was over (which could well be higher a year down the line!) These statistics just go to show the scale of the opportunity for online – and the scale of the risk of ignoring it.

Customer expectations are changing

Almost every merchant has customers (and staff!) who are resistant to the digital revolution. Customers who still prefer to shop in branch, to have face to face conversations, and who like a paper invoice. And that is absolutely fine – those customers are still valuable. But if merchants ignore the exponentially growing segment of customers who actively seek out an online option, they ignore the vast majority of the future of their potential future customer base. In other words – ignore digital at your peril.

Retailers are beginning to steal significant market share from traditional merchants, who now claim a shrinking 23% of sales. Amazon is a major threat but so are other online retailers, as customers prioritise convenience and choice over locality and loyalty. While the temptation is to think that customers would rather maintain in-branch service and assistance, the fact is that people are valuing the convenience, readily available information and comparable choice of online far more highly.

Online isn’t driven by price (and other myths)

Contrary to popular belief, price is not the main reason that people choose to shop online. The top spots are actually driven by greater product range, ease of product comparison and quality of product information.

While it is a widely held notion that online shopping is driving the market ever cheaper and eroding margin, the truth is actually very different – online margins for merchants are often higher (up to around 40% in some cases) than in-branch (usually around 25%), while operating costs and efficiencies can be lower.

Figures show that online shoppers are actually willing to pay more for certain things – environmentally friendly products and convenient delivery being two. But while price isn’t everything, it is important to demonstrate a good value proposition. People are usually willing to pay sensible prices for good value, so it’s important to recognise the difference and not simply discount more heavily.

Another misconception is that online sales cannibalise in-branch purchasing, costing jobs and profits. In actual fact, branch loyalty can be increased by online – think of it as just a wider net to attract shoppers. Recent figures have shown that new customers attracted by merchant websites are actually more likely to open trade accounts and subsequently shop in-branch – so your website should be seen as a bigger shop window offering more choice to more people, not a threat.

Many merchants avoid or delay ecommerce because they believe their customers don’t want an online service. While this may be true for some of your current customer base, it’s important to recognise that offering a digital solution can only widen your opportunities – it doesn’t stop existing customers being able to shop in-branch, but it does open your virtual doors to a huge new sector of potential customers.

It’s not a quick fix

One other misconception around ecommerce is that it’s a quick fix. It’s not quite as simple as just cobbling together a website and listing products on it – it’s a complex process and requires proper investment; it needs to be a focus for the entire business, not an afterthought. Those businesses which do ecommerce well are those which invest it in properly, ensuring that adequate provision is made for development, maintenance and marketing.

The ecommerce platform itself is just one element. Product information is key, and needs to be searchable in numerous ways to capitalise on new trends of web search like Google lens (using image libraries to trawl for search results) and voice search.

The back-end of your business operations also needs to be set up properly to be able to cope with the potential uplift from ecommerce. You need faster access to more accurate information, requiring a compatible, digital ERP system in place to feed your ecommerce platform with information, pricing, availability and projected stock predictions.

Company culture is a major factor of ecommerce success. If your team doesn’t support ecommerce then you are limiting the potential success and maybe even self-sabotaging the initiative. It’s vital that you establish top-down support for ecommerce to ensure every single member of the team is on board and working toward a unified goal.

Customer experience is everything

Successful ecommerce platforms are built around what customers want and how they behave. Extensive research has been done on how people shop both instore and online and the best websites ensure that they are catering to people’s needs.

This incorporates layout, branding, search, product information, delivery information, availability, contact info – anything and everything that affects a customer’s experience of your business. Make it easy for them, make it convenient, well communicated and good value, and they will come back to you time and time again. But be aware that online shoppers are fickle and it doesn’t take much to put them off. One bad experience can be enough to sour the relationship before it’s even begun, so it’s absolutely imperative to take that time to set everything up right at the beginning.

Personalising the experience to customers is another important area. Today’s technology tools make this much easier and your ERP, CRM and eCommerce suppliers should be able to give you plenty of help and guidance in capturing, and using, the relevant information (in a fully data-regulation compliant way, of course!) But essentially it’s all about making the experience, communication and usability customised to each user so that everything is as relevant to them as possible.

Don’t forget about reviews

People read reviews. They also write reviews. Good reviews are a major factor in establishing trust and credibility; and bad reviews can be incredibly damaging. There are many online review platforms to choose from and they all offer a range of options to help you communicate reviews, both good bad.

Remember, while good reviews are obviously very good for business, bad reviews don’t always have to be bad! Taking a proactive approach to managing and responding to reviews can demonstrate excellent customer service, so don’t ignore bad reviews and hope no-one will notice. Respond to them (and ideally solve the issue!) and you may find that you can actually turn a disgruntled one off shopper into a lifelong, loyal customer.

Integrating back-office systems for ecommerce is vital

As touched on above, it’s not enough to simply add an ecommerce platform and hope to keep up. A digital platform requires digital foundations, so it’s really important to ensure that your back-office operations are able to cope.

Everything from order processing, product data codes, customer prices, terms, accounts, history, invoices, statements, stock levels, orders yet to be processed and delivery notes (and a lot more besides) need to be integrated and accessible digitally to ensure a smooth-running ecommerce site.

There are several digital ERP providers serving the merchant industry set up to help you integrate your operations with ecommerce (and yes, we’re one of them) so it’s worth shopping around to find the one that offers the best solution for your business.

No business can afford to do nothing

There was a strong take-away message from the webinar – this is a revolution that is already happening, and ignoring it is not going to help you long term. With the high street in collapse and online retailing taking centre-stage, it’s vital for merchants to keep pace with customer expectation and offer the service that they demand.

As Steve Jobs so famously said, “You’ve got to start with the customer experience and work back towards the technology – not the other way around.”

Business needs to go where the customers are, and provide the level of service and convenience that the modern world has taught them to expect. Anyone who doesn’t do that must surely have a finite future.

NB: All statistics quoted are taken from the webinar presenation

We would like to thank Andy and the BMF for this fascinating and informative webinar, and would wholeheartedly encourage BMF members to attend future sessions.

If you would like to give our digital ERP system, Merchanter, a try, please register here so we can send you login details for the online demo system.