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How to be the best ecommerce retailer?
Darko Butina
BUDS Consulting Ltd.
What shows who is the best?
• Gross margin – over 15%
• Growth – at least +20% above market growth
• NPS (Net Promoter Score) – above 70
• Logistics – no delays (even during peak periods)
• Conversion rate – above 2%
• Profitability – above 1%
E-commerce and brick&mortar retailers
• E-commerce is retail
• It is not all about visits, conversions, average order value etc.
(although all of those are also important for e-commerce)
• Key factors in retail and e-commerce:
• Offer
• Pricing policy
• Marketing approach
E-commerce and brick&mortar retailers
• Advantages of e-commerce vs. brick&mortar:
• Technology
• Data
• Building business from ground up
• Brick&mortar retailers are main competitors of e-commerce retailer
– biggest opportunities for growth are in taking share from
brick&mortar retailers (not from other e-commerce players)
Key areas for e-commerce retailer
Customer support
Website and UX
• First cover certain niche really well, then expand your offering
• Secure more than one source for goods
• Always negotiate – arm yourself with information first and then talk
business – if you prepare right, you can bring +10% (and more) to
your gross margin
• Good management of supply chain differentiates good e-commerce
retailers from bad e-commerce retailers:
• Reliable partners / suppliers – predictable and accurate deliveries of
purchased goods from suppliers
• Know your purchase conditions in detail – base purchase price, quarterly /
yearly bonuses, marketing contributions, other incentives
• Product line-up, presentation and price with various incentives – key
tools in hands of category managers
• Ensure that sales people work closely with purchasing and marketing
• Understand what you sell, who you sell to and which marketing
channels you use
• Know what you sell at what time – adjust your selling, purchasing and
marketing activities accordingly
• Analyse your sales performance constantly – and adjust your
activities accordingly
• Differentiate yourself from brick&mortar retailers so that you:
• Measure and analyse everything
• Act on the basis of data – improve efficiency
• Web advertising is usually reasonable choice for smaller e-commerce
retailers (price vs. performance) – bigger e-commerce retailers
should include also other mass advertising channels
• Creativity brings lower costs – you still need cash, but you can spend
less for the same effect
• Plan your activities at least 6 months in advance
• Get marketing contributions from your suppliers and brands
• Logistics is key to customer satisfaction – and one of main differences
between e-commerce and brick&mortar retailers
• E-commerce retailer which does not own / manage its logistics, will
fail eventually
• Invest in appropriate automated ERP in time – so you will be able to
increase your business without problems and at the same time
satisfy all the demands from third parties (government agencies,
inspectors etc.)
• Track, measure and write-down everything in logistics – then analyse
and improve
• There is always room for improvement with logistics process – you
can save well over 30% in a year
Customer support
• E-commerce shop is virtual – and not real as brick&mortar shop
• Customer support „makes“ e-commerce shop real and tangible for
• E-commerce retailers must be customer focused and not product
• Do not give promises you can not keep to customers – promise only
what you can deliver
• Define standards for communication with customers – time to
answer, pre-defined standard Q&A etc. – and then always meet these
• Use NPS (Net promoter Score) – or any other measurment of
customer satisfaction – act based on results received
Website and UX
• Website should load fast and be reliable
• Data (especially about products and delivery times) has to be reliable
– reliable data means customer trust and customer trust means more
• Shopping process should be intuitive – UX friendly
• Use agile development – to enable you to adjust UX and website
fairly quickly
• Measure and analyse everything – and adapt website accordingly
• Do A/B testing – implement what brings results
• Every serious e-commerce website needs its product manager /
product owner
• Improve gross margin with proper purchasing and pricing
• Achieve growth with combined effort and work of sales and
• NPS (Net Promoter Score) – always be transparent, do not make
promises you cannot keep and be pro-customer – and NPS will grow
• Logistics – no delays (even during peak periods) – always measure,
analyse and improve logistics – and you will
• Conversion rate – besides website and UX, it is the product line-up
and pricing policy that affect conversion
• Profitability – above 1% – as long as margin is OK and costs are under
control, profitability will be there
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