Despite the growth in the e-commerce channel, many retailers are still unable to make truly informed decisions regarding the strategic development of e-commerce in their business, as they are unable to effectively benchmark the performance of the channel.

This is the case for both retailers who think they're performing well and those who don't.

The issue
The big gap in most businesses is still around the strategy piece and the inability to make truly informed decisions in relation to the scope of opportunity presented by the  e-commerce channel, and therefore the structure and investment that is required in order to maximise the opportunity and sweat the asset.
While many multi channel retailers are now enjoying seven, eight or even nine digit revenues from e-commerce, most retailers still lack real insight into whether or not the channel is as successful as it might be.
As they don’t know what to benchmark against.
There are too few e-commerce players on the board
This lack of insight is partly due to the fact that e-commerce is not its own directorate in most businesses, and therefore there isn’t an experienced e-commerce practitioner on the board. As such, decisions made around strategy, structure, technology and investment can be ill-informed.

But to caveat this, there is still a big shortfall of experienced practioners who have the breadth of skills and depth of experience required to add this strategic insight at board level. And this is also often determined by what stage of the lifecycle e-commerce is at within each business.
The level of investment in technology and customer experience is often insufficient
A question for retailers: “How much would you invest in a new store shop fit?”

In most cases, it’ll be a very similar amount, if not more than you would invest in developing your e-commerce platform, and yet the latter will end up driving up to 20% of your turnover or, well over 10 times the turnover of any one store.
I hear the term ‘fit for purpose’ being bandied about frequently. But I wonder if that is entirely relevant to the e-commerce channel. As the lack of insight makes it a pretty tough call to determine, what is the benchmark for being fit for purpose?

So while many companies have made significant investments, what might your ROI have looked like if you’d raised the bar and invested enough to deliver a ‘best in class‘ website?
The web is a driver for all channels
Let’s not forget that the web is a driver for all channels. The question I still hear retailers asking frequently is around the web cannibalising store sales. To the contrary, the web is a driver for retail sales. A number of retailers (including Boots and Argos) who have tested the impact of the web on store sales have concluded that for every sale the web generates online, it pushes three sales in store. How many retailers are accounting for this impact when it comes to determining the level of expenditure required on their web channel?

The operational structure
As outlined above, there is also a lack of understanding over what the operational structure should be. Why does every multi channel retailer have a different structure to manage this channel? Because that’s essentially what happens. Surely there must be a standard model for job roles and remits that can be applied? With scale, level of adoption and levels of multi channel integration being the only key aspects that differentiate the core structural and operational requirements.
Multiple channels vs integrated multi channel
And of course another challenge is that most retailers run multiple channel businesses and not integrated multi channel companies, or cross channel businesses. And therefore very few retailers provide the same customer experience across all touch points with the brand. Customers want to do business with an always open retailer who will deliver a consistent experience irrespective of the channel.
In addition, very few retailers have a single customer view and are therefore unable to drive and influence the behaviour of their customer base across all channels, and thus lose out on the vastly increased value of a multi channel customer vs a single channel customer.
The last mile disappoints
Finally, the last mile is the most important one in the customer experience of buying online and yet it’s the one area that gets the least amount of attention from a strategic perspective. So even when you do get the customer and brand experience right on the website, this all becomes irrelevant when the customer is let down at the end of the process.
Martin Newman is Managing Consultant at Conchango.

Martin Newman

Published 3 November, 2008 by Martin Newman

Martin Newman is an independent e-commerce consultant and contributor to Econsultancy.

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Comments (2)


ecommerce development

This is great.

about 9 years ago


Gijsbert van der Sleen

@Martin, i agree on the observations you make. Research I have done last year (E-Business Benchmark 2008) shows that e-business or digital marketing is still left at departmental level, making it hard to show the true value at organizational level. Second, most organizations fail to report correct metrics. Even the work done by for example Dave Chaffey and/or Webtrends Digital Marketing Maturity Model focus on measurement of the channel itself. This leaves out the external benchmark (but who does have this data?) and the internal comparative data with other channels. This makes it hard to impossible to assess the true performance of the digital channels. So we are all playing the game but can only be scored to our own objectives with no league table at the end of the season. This is a big gap which should be filled, but who will step up to the plate. Third, digital marketeers are too often focused on the sexy activities in the channel and not on managing the organization. This requires a different breed of digital marketeers who can also act on board level. Sp what can be done? Well, the firs step to improvement is the realization of the challenge. Articles like this and models such as I use can help in clarifying next steps.

almost 9 years ago

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