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Dec 5, 2017 10:42:03 AM

Planning to invest in digital commerce? Forget silver bullets!

Sampo Hämäläinen

Managing Partner

investing-in-digital-commerce.jpgWhat if there would be a platform that could handle all of your ecommerce needs. From elegant UI elements with a smooth purchase flow and product recommendations to critical back-end capabilities such as payment, pricing, inventory and product information management?

Just plug in your CRM, ERP and digital marketing and let’s throw in hosting, too – a turn-key solution that allows you to focus on your core business.

Well, it doesn’t exist. It’s a classic silver bullet trap many companies with purely IT sourcing driven decision-making processes fall for.

Think about these points before planning your next digital commerce investment.

Understand the trade-offs

It rarely makes sense to build everything from scratch. Deploying a standard ecommerce platform is (often) faster, provides you with regular software updates and the monolithic platforms usually perform better in SEO than modern JavaScript-heavy single-page applications. However, they come with the downside of inflexibility, license fees and other limitations.

If you decide to go fully custom, you can get exactly what you want and own all IPRs, but the building phase will cost more and you are more dependent on the developers who know the codebase.

Consider technology as a sales tool, not the purpose

When making the decision, it is important to understand the real pros and cons for each scenario. You won’t find a perfect solution – it will always be a balancing act between trade-offs. Understanding them is crucial.

Digital commerce happens only after it’s live. Don’t think of digital commerce as a project. Sales is a continuous process, and you will need to continuously adapt to changes. Don’t budget too much on the initial build phase, but try to go live as soon as possible and invest in future development instead.

The business value becomes real only after you’re live – only then can you gather all the important data, feedback and understanding about what works for your customers and what doesn’t.

It sometimes makes sense to validate the business case for a complex ecommerce solution with a cheap and simple shop such as Shopify or a landing page with a purchase funnel for a limited number of customers. Once you have real customer validation – acquired at a low cost – you will have better knowledge of how to manage the bigger investment.

Digital commerce is not an application

Digital commerce is a complex system of business processes, IT systems, organisational roles and responsibilities, partnerships and other capabilities that build up the customer experience and results in sales. It does not matter how visually appealing your webshop is if, for example, your logistics providers fails, customers don’t get notified of delays and decide to never return again.

To successfully manage digital commerce, you need systems thinking: everything affects everything. In our experience, using visual thinking tools can be really helpful for structuring big systems and dependencies, but also to lead and communicate business priorities.

For example, if logistics-related customer information is a clear pain point in the customer journey and we can prove it with data, flag it in the customer journey map or digital commerce canvas to indicate that it is a high business priority.

Understand the problem

Don’t outsource your core business processes. Sales is at the very core of all commercial organisations, but we still keep hearing of cases where a systems integration vendor owns the IPRs for their customer’s shop. Besides IPR issues, we truly believe that it is crucial to have in-house people who understand ecommerce, including on the technical level.

Doing business prioritisation, avoiding vendor lock-in situations and quickly adapting to changes in customer behaviour is very challenging unless you have control of your own shop.

Before thinking too much about solutions, challenge yourself to think about the real problem your business is facing in digital commerce, conversion or reach. Analyse the purchase journeys with real data: how much inbound you get per channel and whether they convert into sales or not. 

Are you targeting the right audience with relevant message? Are you measuring only CTR or sales conversion? Are you proceeding with the same media plan all year around or experimenting with different tactics for different micro segments and adopting the learnings in digital services and channels?

The real problem might just as well lie in the quality of inbound leads or poor loyalty management (in general, it is 6-7 times cheaper to sell to old than new customers). Lassila & Tikanoja, for example, increased their online sales by +400% by developing the quality of inbound traffic based on sales data. Vapo made an all-time pellet sales record thanks to personalised and relevant email marketing to their existing customers.

Besides factual data, make sure to meet and interview real customers. In many cases, a small optimisation on the existing channels might have the biggest ROI as long as the big picture is understood.

Love the problem, not the solution.

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