Thursday, March 23, 2017

How Innovation in Ecommerce is Bringing Merchants Higher Returns

Retailers trying to navigate the world of ecommerce are struggling to find a balance between selling as much of their products as they can across multiple platforms while also trying to do so well, have a good reputation, and maintain their brand name. Retailers have found great advantages of using websites like Amazon and eBay as ways to get their products out to the mass population, but with that, retailers feel as though they are losing control of their brand and losing control of how their products and customer relationships are handled. Not only that, but by using multiple platforms, it can become overwhelming and difficult to manage and keep organized. 

With these issues comes people trying to come up with solutions as to how retailers can continue to stay competitive by selling their products over multiple platforms but also gain the control of their products and brand back. This article suggests that there are three key components of their business that a retailer should focus on when looking into the future of their business in order to find success, those being mobile purchasing, inventory management, and discounting tactics.

Mobile commerce has taken over the world of ecommerce and online shopping with more than half of online sales being made over a mobile device. With this, challenges have arisen such as the viewing of websites on mobile devices and also the frustrations of the logistics of making an online purchase. Although not mentioned in this specific article, what has come out of this new world of ecommerce is retailers creating their own mobile apps that a user can download on to their mobile device. The app allows the retailer to organize and display their products as they choose to and not only that, they can design the app to manufacture the experience they want their users to have. Mobile apps give retailers their control back of how their online store looks and how it will be organized.

Managing inventory has become especially difficult with retailers selling their products over multiple platforms. It becomes hard for them to keep track of their products and it has allowed for more error to occur. This particular article gives the example of having only 1 item of product left but having two different customers trying to purchase that product at the same time on two different websites. Retailers need for better communication to occur between the two, or more, websites, or perhaps a third platform to facilitate communication between the websites.

Although not many solutions have been created to these problems that retailers are facing, there is a large demand for them with the world of ecommerce basically forcing retailers to sell over multiple platforms in order to find great success. This article demonstrations the areas that need to be focused on and where IT may be heading for advancements to the world of ecommerce.

1 comment:

Jacqui Schmidt said...

I believe that many companies also realize the importance of mobile purchasing, inventory management, and discounting tactics. Although for comparing reasons, I am going to expand the category of mobile purchasing to e-commerce as whole. With that in mind I believe one company in particular really stresses that the future of their company depends on these the three categories; that company is Walmart.
As far as discounting tactics, well that is really what Walmart is known for. Walmart’s strategy is to keep prices low, giving the savings to the customer and instead making a profit with volume of customers. Typically, stores will get the bargain from the wholesaler, keep prices unchanged, and take the extra money for themselves. As Walmart has grown into the company that it is, it can undercut prices even lower when it needs to; i.e. during price wars with competitors.
A blog called, “Walmart’s successful supply chain management,” written by Trade gecko talks about their impressive inventory management. “Under a Walmart’s supply chain initiative called Vendor Managed Inventory (VMI), manufacturers became responsible for managing their products in Walmart’s warehouses. As a result, Walmart was able to expect close to 100% order fulfilment on merchandise.” The article went on to mention that it was the “strategic” relationships with their suppliers that allows Walmart to be so successful. Guru focus states that Walmart’s inventory turnover rate is 2.10 and their days in inventory is sitting at about 43.
Walmart had always been successful in the past when dealing with competitors. Every store who tried to compete was only to be undercut by Walmart’s low prices. Walmart’s new competitor was the online shopping phenomena that called itself Amazon.
To stay competitive and protect the future of Walmart, they realized they needed a strong presence in e-commerce. Walmart’s aggressive plan to boost e-commerce did not just involve adding warehouses for online shipments or offering their low prices, Walmart wanted to find a way to personalize customer’s online experience. Each online shopper has a different home page based on their location, weather, and past purchases. Walmart is recognizing the customers past purchases along with past searches to provide recommendations personalized to each customer. Walmart believes that adding personalized touches to their website will be the key, along with their low prices, to achieve success on the online-shopping platform.
Among the biggest change, Walmart has featured ShippingPass. There is a 30-day-free-trial with a $49 a year price after the trial. ShippingPass allows customers to order online and receive 2-day shipping with any purchase. It is almost impossible not to see the similarities between ShippingPass and Amazon Prime. After these improvements to their online presence, Amazon’s e-commerce sales had increases 30%.
Walmart, although not right away, fulfills the three objectives to ensure future profitability and strong brand name recognition. With their ability to keep prices low, manage inventory, and realization to hold a strong e-commerce presence Walmart will most likely be around to stay.