Why brands fail on e-commerce and what they can do about it

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The key is in mastering the basics

For most businesses, e-commerce is (and has been for some time now) an indispensable topic for C-level executives, strategists, analysts, agencies and more when it comes to crafting growth plans.

Beyond all the incredible, exponential figures about e-commerce’s size, growth and potential, I would like to share some perspectives that could bridge the gap between vision and success.

Note: By definition, “Brands” refers to (mostly) companies with B2C brands that have an e-commerce business, primarily through e-commerce platforms with an “Official Store”. These Brands can be selling products from any of these categories: FMCG, Consumer Electronics, Fashion, to name a few.

Currently, I lead a team “at the tip of the spear” where we work closely with Brands to convert the shoppers at the end of their customer journey into delivering the sales (GMV).

The rigorous interaction and engagement with Brands have taught us that multiple key factors often cause significant gaps between vision (e.g. “We want to grow ten times bigger”) and success (e.g. “How come we only grew twice?”).

These can be narrowed down to three most frequently observed factors:

1) Lack of effective organizational set-up optimized for E-Commerce

For all the amazing things about Digital Commerce, the realization of success (e.g. convert more shoppers to buy, and shoppers to buy more) still depends largely on People & Teams.

Any partnership between Brands and e-commerce platforms cannot succeed by solely depending on the biggest exposure, best tools (e.g. search, store decoration, flash sales, etc) and best deals (e.g. free delivery, heavy discounts, vouchers, etc).

It still boils down to the People & Teams (both on Brands’ and E-Commerce Platform’s side) who will work together to strategize, plan, execute and ideally, perform real-time optimizations.

However, at most Southeast Asian Brands (particularly in Indonesia), a lack of organisational set-up that’s designed optimally for e-commerce is a major impediment to true exponential growth.

The first challenge: some Brands lack an e-commerce team.

If the same Brand Key Account Manager (KAM) has to prioritise between three to five offline channels (around 90 per cent of national annual sales) and three to five e-commerce platforms (one to 10 per cent of national annual sales), it’s clear where the attention, effort and resources will go to.

The same goes for the Operation’s role (to manage online stores & product page front-end operations), Graphics role (to develop visuals for mobile-App-optimized presentation to online shopper) and even Supply Chain roles (to manage On-Time-In-Full (OTIF) stock fulfillment for high availability, either through the Brand’s own warehouses or a third Party like Distributor or “Enabler”).

It is crucial that Brands have a “Head of e-commerce” and a KAM specially dedicated for e-commerce.

The best brands can even take it further by having dedicated KAM per E-commerce platform to increase agility/speed and minimize conflict of interest.

The second challenge: some Brands are either not truly committed to or lacking support from the organization, due to poor cross-functional support.

The most typical structural setup is the reporting line between the Head of e-commerce and the Sales Director.

While this may make sense on the surface, the reality is the Sales Director would inevitably be incentivized to prioritise “bigger” offline channels again, decreasing the necessary investment of effort and resources into future-proofing the business through e-commerce.

Also, to win in e-commerce, Brands need to have the attention, expertise and insights from multiple functions — excellence in sales tactics, marketing and supplying.

The best practices we see from exponential-growth Brands to combat these two problems include: having the Head of e-commerce report directly to the CEO in the market or to an N-1, equipping the Head of e-commerce with its autonomous e-commerce budget independent from offline channels, and even designing the budget to be “complete”.

This will increase the speed of decision-making, problem-solving and brainstorming so that Brands grow in a more dynamic, real-time manner.

2) Eagerness to “shortcut” to the “cool, sexy” stage before mastering fundamentals

All e-commerce practitioners know the following basic theory: To sell successfully, one requires a lot of eyeball-traffic which can be exchanged for product page views that can be converted into GMV/Sales through things like compelling content, product availability, competitive prices, other value-enhancing mechanics and multiple payment options. All while being underpinned by a seamless end-to-end experience (no bugs, no crashes, minimal latency, etc).

The real challenge is not being unaware of the theory, but knowing how to execute each of these building blocks with quality output, speed and consistency.

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From my experience, Brands often start most discussions by asking these types of questions for e-commerce planning:

“What’s the big launch for next year?”

“What are the cool stuff we can do (or do more of)?”

“What’s the latest technology that we can leverage on to do cutting-edge stuff?”

These types of questions are valid and important, but the problem arises when Brands only focus on these questions and neglect other fundamental questions as a result.

Also Read: What we learned from almost failing before an Indonesia break through

Exponential-growth Brands always work hard to prioritize mastering the fundamentals before moving on to the “cool/sexy/awesome” topics.

They put a high priority on “hygiene factors” before anything else.

Questions to Brands: Do you have your fundamentals in check?

  • Support from top management to work with Supply Chain and Distributor to ensure that stock fulfilment to consumers is On-Time and In-Full for consistent high product availability.
  • Collaboration with marketing teams, creative agencies and graphics team to ensure that all product shots are of high-quality. The same goes for all the Brand’s key visuals on the e-commerce platform, within their stores and beyond.
  • Clearing weekly and monthly content and promotional plans to refresh key messages to shoppers.
  • Strong channel management practices and pricing strategies to ensure regular competitive prices while not destroying brand value through over-discounting.

Most of all, since e-commerce platforms operate by algorithmic ranking, they need to do all of the above consistently to gain traction for their Brands and SKUs in order to stand out from the millions of products on e-commerce.

3) Not driving enough traffic to the Brand’s official product page

A commonly mentioned analogy that e-commerce practitioners have heard of many times goes like this:

“Imagine the e-commerce platform as the traditional offline Shopping Mall, and your Brand’s Official Store is one of the many shops in the mall. While the Mall will invest in bringing in total traffic to the building, the shop needs to do its own advertising within and outside the Mall to bring more of its target shoppers to its doorstep.”

Most Brands that fail to grow as fast as their expectations often have the misconception that “The e-commerce market is growing fast and it has a huge quantity of daily active users (DAU), so there is more than enough traffic to give my brand sustained growth in Page Views. Therefore, why do I need to invest in bringing my own traffic?”

The thing is, just like the offline Mall, all e-commerce platforms want to grow the number of brands, sellers, assortment and product categories and it is not efficient for the platform to invest in hyper-targeted online traffic that’s best-suited for every Product Category and every Brand.

So while the DAU continues increasing, it may or may not benefit the specific Brand immediately.

This means that, while it’s easy for Brands to tap on the existing platform DAU at the start to gain a fast uptick in Page Views, it will become increasingly difficult to sustain this trajectory.

Brands must also remember that on any platforms, there exists a highly dynamic environment.

Every Brand wants to stand out and grow fast, and while one of e-commerce’s advantage is the so-called “infinite” shelf-space, one must remember that there are limits to online shoppers’ attention span.

The wisest Brands understand this and invest in driving quality traffic consistently to their Official Stores or Product Pages on the e-commerce platform.

They have a good mix of “re-targeting high-affinity customers” and “acquiring new relevant customers” traffic strategy. They constantly perform optimizations to continuously improve the quality of the traffic. Plus, they don’t simply focus on the quantity but equally devote attention to the quality.

Finally, these exponential-growth Brands leverage on both their Paid and Owned Media assets to do an always-on traffic strategy instead of just waiting to only drive traffic during the major campaigns by the e-commerce Platform.

In reality, it is definitely not easy to immediately implement the above practices.
It requires strong willingness & commitment to shift mindsets and make short-term trade-offs and sacrifices, especially from the top-level decision-makers.

But, from experience, it is very much possible, and it takes courageous talents & executives in any Brands to start the ball rolling (& keep it so).

“Rely not on your euphoric vision, but make it your victorious reality”.

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