eretail

Eretail: keeping control of online sales

@Xavier De Mazenod
9 October 2019

Eretail will become inevitable for companies, it is undeniable. Not anticipating this e-commerce evolution is a risk of losing control over your online sales strategy.

Nowadays, brands sell a high portion of their products or services online, but this can be a trap because these sales are made via an e-commerce website that has installed a balance of power… in its favour.

Therefore, the company no longer has a hold on the relationship, a dangerous situation. In this article, we discuss some ways to keep or regain control of online sales.

eretail

Why talking about eretail?

Which company has not tried an online sales strategy for its products or is not wondering about e-commerce? Inevitably, it is facing the rapid acceleration of techniques and customs, with the emergence of new distribution channels. But above all it is facing the need for strategic thinking, for example about online / offline complementarity or the implementation of omnicanality.

For Grégory Pallière, co-founder of iRevolution, « e-commerce has become essential. Every company has to consider this sales channel, whatever its industry. The only thing we don’t know is: when will it become a must in our area? Do I have six months or three years left?
We could almost wonder if one day we will not stop talking about e-commerce because it will become a natural part of commerce, like we have franchised stores or own stores. ».

Unavoidable, indeed. According to the Fevad, in 2018, in France, 85% of Internet users made a purchase online. This means that more than 37.5 million French people buy on Internet.

Today, in B2C, talking about e-commerce or physical distribution (retail) is no longer enough. Selling online is becoming more and more complex and must consider, for example, omnichannel strategies. We will therefore rather speak of eretail which trends are constantly evolving.

Can we fight against marketplaces?

Creating an e-commerce channel, being autonomous and keeping customer data is clearly tempting. But you must be careful: if the technical aspects and construction skills of an e-commerce website are fairly easy to master by the company, competition should not be underestimated.

Some competitors are a step ahead, have expertise and… funding. Here are a few examples: the Chinese Alibaba ($2.34 billion in sales in 2017), the American eBay ($8.5 billion in sales in 2017), the Japanese Rakuten ($1.4 billion in sales in 2015) or the Norwegian media group that owns the Bon Coin, Schibsted ($1.9 billion in sales in 2017) have numerous B2B or B2C marketplaces.

Not to mention start-ups that are hoping to make a place for themselves in the sun, including in the niche in which our company wants to develop.

We must therefore be careful not to make a strategic mistake by wanting to do everything without external partners, as Kévin Palop of iRevolution explains  : « If the objective is to distribute/sell, some players have already won this battle. Relying on Amazon, Alibaba, Zooplus to distribute online is necessary. Learning how to negotiate with them, restoring a relational balance, all these things are at the heart of distribution expertise, but are neglected because of a bad fight. »

Omnichannel or nothing

« For example, if you look at the transportation sector, adds Grégory Pallière, when you buy an airline ticket or a train ticket, you no longer have to worry about buying it online, at a tour operator or at the station. You just want to buy your ticket, no matter how you do it, no matter what channel you use. The sales strategy must therefore be multi-channel. »

This is true for Europe, but it is also true internationally. According to Deloitte’s report « From bricks to clicks » (download PDF file), while many expansion efforts were traditionally focused on opening new physical stores, retailers have recently turned to a new growth driver: entering global markets through e-commerce. « In today’s competitive global marketplace, the report states, e-commerce offers a low risk, a faster way to enter, test and penetrate international markets ».

Changing purchasing behaviors

Another difficulty, mentioned above, that complicates the multi-channel strategy is that purchasing behaviours are changing rapidly. We would never have thought at the beginning of e-commerce that the level of consumer confidence in online shopping could be so high.

« The e-commerce wave began on low-risk and low-disruptive products, adds Grégory Pallière. That was when Amazon was selling books or CDs. So, if the sale didn’t work, I would just lose 6 or 10 euros. From there, we started to develop habits and confidence in this distribution channel and in these tools. »

What about luxury?

Trust is a cornerstone of trade. Even more so in online commerce because we don’t see the product nor the retailer. Despite this, in 2014 there was still some doubts about the ability of luxury brands to sell online. Today, we can observe that it was wrong. The luxury sector has started to use ecommerce, but is now facing specialized players that are already established. Even if some pioneer brands are doing well, such as Gucci, which increased its net sales by 86% in one year.

Luxury: The Kering Group takes over its e-commerce business

« As consumers become more and more confident towards e-commerce, comments Grégory Pallière, we are now able to buy Maserati cars online. Fifteen years ago, we were saying that we would never buy these luxury products online. However, it is clear that today in Asia, 70% of luxury sales are made through the online channel. »

So, we must anticipate the future: what we believe knowing today does not correspond to the reality of tomorrow. If eretail is not yet a necessity for companies, it will be sooner or later, and we must anticipate it not to be overwhelmed.

How to master eretail?

To be known, an e-commerce site needs brands, but once the sales site has a reputation, the power balance is reversed. This can lead to a loss of control over the eretail strategy. Grégory Pallière gives this example of a Polish manufacturer customer for GPG:

  • « I took over the management of the subsidiary five years ago. The retail channel accounted for only 1% of sales. So it was not a priority, so I didn’t worry about it. Four years later, this channel already accounted for 30% of sales. »

Explained the client to Gregory.

He then told him:

    • « I have a problem, because it means that 30% of my sales are made on a channel I don’t control! Everyone was happy, this channel was growing. Except that this growth is done to the detriment of control and the loss of control, in the end, ends up costing a lot of money. »
eretail : Premium or nothing

As Gregory Pallière once again points out: « eRetail is the very essence of electronic commerce. Tackling a rapidly expanding digital distribution channel is urgent. And secondly, completely rethinking your omnichannel distribution, where professionalism is no longer a choice if you want to maintain or develop a superior quality position, is imperative »

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