Moving from selling products to delivering services thanks to digital

@Xavier De Mazenod
12 November 2019

In the early days of the Web, life was so simple. To sell stuff online, all one had to do was create an e-commerce website. It was plain sailing. Any manufacturer in the middle of nowhere could gain easy access to the worldwide market. Bygones are bygones, however, and the subject has become considerably thornier. Creating an e-merchant website is no longer sufficient. Worse still, it could even prove counterproductive. Thus, a service-centric community marketing strategy is essential for any brand. And ancillary services are an indispensable complement for your product-range to address new customer expectations.

E-commerce itself has become more and more demanding in terms of skills over the years. Only displaying your products in your own branded Website is no longer sufficient. Of course, it is necessary to master digital marketing, online customer relations, process optimization, and logistics. But even if you can acquire all these skills, you will still lag behind retail platforms like Amazon or Alibaba. Years of experience, heaps of customer behavior data, and continuous improvement of their services have made them unavoidable. Unless you can add them as partners, maybe?

How to fail your online sales strategy?

Companies that still stick to this type of strategy are five or even ten years behind and are failing, as Kevin Palop explains once before. Not to mention that nowadays, any business of any size can do that. E-commerce has become routine, and creating a proprietary online store is threatening your position. Smaller brands, agile and nimble start-ups that will improve customer experience better and faster than major brands, will become your competitors.

Gregory Palliere, the co-founder of Ziwig, provides a clear example of the archetypal failure produced by such a strategic mistake: “Samsung launched its online store that is nothing more than an e-commerce website where their products are displayed only a little better than anywhere else. Even that isn’t certain. I ordered the Samsung Galaxy S 10 from there. Instead of being delivered on the right date as announced by the Website, it was shipped a week late without any warning nor notification. This is what I call a total disaster, a customer experience that is way below that of Amazon. Besides, the smartphone which was delivered ended up being faulty, and I had to call customer service. As I explained that the product was defective, they answered, “Oh, I’m sure it is, was the answer, but for now, our system still states that you have not yet received the product, you know. As a result, you should wait until we acknowledge the receipt of your phone. I had to wait for three weeks with a flawed product. After three weeks, they told me that I could print the return label. But in fact, they declared they couldn’t fix it. Hence, they ended up giving me a refund so that I could buy another one. I asked for a refund, and of course, I never bought twice the same product.”

We could always find counterexamples. One could even surmise that it doesn’t apply to all. That Apple, for example, is doing very well with a proprietary online store. But it is an exception that proves the rule. Apple has taken pains at nurturing a community of staunch followers who are almost always in synch with the brand.

The secret of differenciation by service with the help of digital

Gregory Palliere has another example for us. That of “a pharmaceutical company which, inspired by the success of an online healthcare information portal, decided to create content websites enabling direct access to patients. They produced content, some of it quite rich, but since they only know how to talk to GPs, their content ended up being very literary, not at all fun nor educational. As a result, after two years, they stopped everything after having spent €80m.”

The takeaway from these failures is that it is necessary to stop being obsessed with one’s products. None of these online stores can differentiate themselves anymore. And the size of their logo can do nothing to save them. All the while, consumers are shopping around using goodguide.com instead.

It is, therefore, necessary to differentiate, notably through the provision of ancillary services, the brand must be able to offer.

The first level of service is to offer personalized products. This is what Nike has been doing for the past five years with Nike by You, which allows you to customize your shoes, or MyM&Ms, with the customization of candy and chocolates.

The second level of differentiation is to offer services regarding product usage, deliver advice, and tutorials. This is what Heinz and Kraft do with their recipes. This is the path taken by hardware chain B&Q with its ideas and advice blog and its DIY guides.

B&Q does more than sell hardware. They will also help you build your kitchen or bathroom.

Forget about the product, focus on customers instead

Beyond the provision of advice or assistance, the third level of services is up for grabs. For Gregory Palliere, it consists in “taking the lead in one’s category and nurturing the ecosystem. It is no longer sufficient to promote products nor even product-related services.

That is to say, “if I believe I am a leader in pet food, for example, I may also resell other brands because in some cases they will be more appropriate than mine, veterinary services that I do not specialize in, or DNA analyses from other vendors, physical examinations by veterinarians, or advice from a kennel club, etc. This shows that I believe that our expertise is sufficient for us to take the lead in the nurturing of our ecosystem and coordinate all the players, which are part of this category.”

Few companies have reached this level of maturity, and most remain at stage 1 or 2 of the service scale. Gregory Palliere cites European outdoors chain Decathlon as exemplary in customer experience management (activity or product tests, community listening management, no weighting on customer feedback, local product exchange 2nd hand, here in Italy) or Lego. The Danish company was saved from bankruptcy when they gave up a product-centric approach in favor of a community attitude: producing tutorials in successful video cartoons, developing home automation and creating of partnerships with schools, creating 3D manufacturing printing diagrams, etc.

The high quality of service imposed by these pioneers is very harsh for brands that have remained stuck at service level 1 or, even worse, at a proprietary online store strategy level. Unfortunately for them, there is only one solution left: change course or disappear under the pressure of the expectations and requirements of e-clients. No one will be spared, not even the most established brands, nor even the most arrogant.

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