1: Not selling online at all

Selling online – is it worth it?

This might seem a pretty obvious one – and most retail businesses today are established with online sales being ‘built-in’ from the outset as a part of the business model.

However, (as hard as it is to understand) many ‘brick-and-mortar’ retailers and brands have (surprisingly) still not left their comfort zone to join the online selling frenzy. 

According to statistics from Eurostat (2018), while nearly 90% of enterprises across the EU have their own website or app, only 40% of enterprises offer sales through online marketplaces. This means that around 10% of businesses in the EU are STILL not offering the possibility of online sales AT ALL, and some 60% are missing out on a serious gain in potential sales via online marketplaces.

Many of these businesses have well-established sales environments that are already highly profitable based on traditional sales lures such as buying frenzies, value distortion, and promotion of loss-leaders. For some of these megabrands, they simply don’t see the value in investing in a potentially less-profitable online sales venture, which might only undercut and undermine their existing physical sales venues.

So this may leave us asking: Is it still worth making the investment to sell online at all?

Well, first consider the scale of online sales. According to the study, during 2019 approximately 1.92 BILLION people purchased goods or services online and spent more than 3.5 trillion dollars (USD) worldwide.

Secondly, the market share of online sales is still growing. Online sales are still growing more quickly than conventional physical retail sales – albeit at a somewhat more mature pace than a decade ago. While global retail sales have remained steady (with a projected growth of around 4.5% predicted per year for the next few years), the e-commerce sector is continuing to take a greater share of the total. Online sales are expected to grow at a rate of between 15-17% for the next few years while taking a significant portion of total retail sales – predicted to reach an 18.1% share of all retail sales in 2021.

Figure 1. Retail e-commerce sales worldwide, 2017-2023 [source]

When looking specifically at the EU market, we can see a stable long-term trend towards more e-commerce (consisting of the webshop, app, marketplace, and EDI sales) with 7% more businesses adopting e-commerce in their sales strategy in the 10-year period up to 2018, resulting in a 6% gain in turnover overall. This demonstrates that by not including e-commerce as a part of your sales strategy you are missing out on sales growth.

The value of online sales is now quite universally accepted, but it is surprising how even well-established ‘brick-and-mortar’ retailers can be late arriving at the e-commerce party.

Case study: IKEA vs. Primark

Take megabrands IKEA and Primark for example. Both of these use a similar strategy to promote spending through careful design of the shopping environment and perceived value structure of their goods. It is a strategy that works well with a large physical retail venue but does not translate well to online sales, and so both have been reluctant to join the online party.

IKEA was established in 1943 and only launched online sales in 2000. This was only limited to Denmark and Sweden, to begin with. After being rolled out in numerous other countries, IKEA's online sales have grown to make up 11% of its total sales for 2019, and online sales for the Swedish furniture giant grew by an astonishing 46% from the previous year. Instead of merely replacing physical sales with online sales, their total sales growth has been boosted by around 5% by selling online, and that advantage is still growing each year.

Affordable fashion megabrand Primark however, still relies entirely on physical retail sales, while leveraging its own website to spread its brand message and exposing its catalog to passing web-visitors. While they go to the effort of maintaining an online product catalog on their website, they do not offer the option to make a purchase (with the exception of purchasing a gift voucher).

Think of all the sales opportunities they must be missing out on!

Despite substantial investment in opening new stores in the USA, Primark’s sales growth has languished at around 4% for the same period in 2019 and has plummeted to -24% (a decline of 24% in sales) during the 2020 coronavirus pandemic – at a time when other retailers were seeing unprecedented online sales growth.

By comparison, during the same 2020 period, IKEA saw a drop in sales of only 4%, with huge potential losses of physical sales being offset by growth in their online sales of 60%.

2: Not selling through multiple platforms

Do you need to sell across multiple platforms? Or is just one sales channel enough?

According to a 2019 survey of global online sales, nearly half of all sales take place on e-commerce platforms such as Amazon, eBay, and Alibaba, while only 18% of sales take place via a Brand’s own website or app.

Doing only slightly better were online retailers, who collectively make up only 26% of all online sales.

Figure 2. Distribution of online purchases worldwide as of July 2019, by channel [source]

The market share of online platforms is still growing:

• In the USA, the market share of online platforms is even bigger than the global average - reaching about 60% of the total online sales, and with Amazon alone making up 47% of all online sales during 2019.
• 80% of Amazon sellers sell across multiple platforms, the biggest of these being eBay, which 52% of sellers use as well.
• Out of all sales made via Amazon, Jeff Bezos revealed that (during 2017) more than half of the sales were generated by third-party (marketplace) sellers.
• Although Amazon is the biggest player, the market remains dynamic with newcomers like Walmart and Wish obtaining bigger chunks of the total share in the US.
• In the EU, Amazon has seen its market share challenged by multiple marketplace rivals, such as Fruugo, Otto, Cdiscount, bol.com, and Zalando. You see: It pays off to sell through as many channels as possible to ‘cover your bases’ and find the right sales channel for your products.

The role of marketplace sales is clearly more prominent in today’s e-commerce landscape – but this still leaves the question: If Amazon is the biggest marketplace, why sell on any marketplace other than Amazon? Does it make sense to sell through multiple channels?

The answer is yes, for the following reasons:  Firstly, we can see from the points above that the ‘marketplace sales’ segment is a dynamic one, and while Amazon may be the market leader right now, that will not necessarily be the case forever, or even for next year.

Secondly, your brand and your products might sell better or more profitably on different marketplaces, which cultivate their own customer base. Within the European market, there are multiple ‘home-grown’ marketplaces with a loyal fan-base of unique customers and many of these customers may not be reached through Amazon at all. The only way to find out which of these marketplaces will work for your brand is to actually test it out, and collect the data.

Thirdly, as mentioned above, 80% of Amazon marketplace sellers also sell through other marketplaces. Although following the crowd is not always the best strategy, it does suggest a consensus on the value of multi-channel selling.

There is also a considerable difference between product types; while Amazon might be the biggest of the bunch for all e-commerce (when averaged out), it lags behind others for certain products. Of online apparel and footwear sales in Europe, Amazon only ranks as #2 in Germany (behind Otto), #3 in France, and is only #7 in the UK.

By casting your net as wide as possible (and selling through the maximum number of possible channels), you can explore every possibility to maximize your sales revenues and margins. While the opportunity cost of missing out on these potential sales is huge, the actual cost and risk of trying it out are very small. Even if you discover that a particular marketplace doesn’t work for your brand, you will be able to collect valuable data on customer preferences and behaviors for future marketing and sales strategies.

3: Wasting time (and money) with manual product feed management

So you have made the smart move to branch out into multi-channel selling – well done!

Now comes the hard part: exporting all your product data to each platform. Both Amazon and eBay offer custom tools to import and export bulk product listings, and this generally means using Excel and other software to constantly maintain product and stock information using CSV or XML files. These are then either manually uploaded or made available as product feeds.

This is often seen as a low-risk way of starting to sell across multiple platforms because it comes with minimal investment in software or third-party solutions - but it comes with a strong risk to growth if you continue to use these ‘legacy’ systems for too long.

Quite simply, they will strangle your growth potential at an exponential rate the longer you continue to use them, because of the increase in time required to properly maintain them as your inventory grows. These manual systems have very distinct disadvantages over time, such as:

• Stock levels have to be manually checked and corrected (and regularly)
• Overselling or underselling becomes likely due to update lag
• Data field variations such as Product Title, SKU, Descriptions, and other attributes vary across platforms. The requirements for these can be rigorous and can also change frequently, forcing sellers to invest time in optimizing for each platform or risk losing visibility (and sales)
• Image requirements can also vary across platforms (as with data field requirements, these change often, so need regularly updated)
• Pricing structures across platforms can be hard to maintain and adjust (loss of competitiveness or margins)
• Becomes increasingly time-consuming/costly as your product catalog grows
• Variations in description text cannot be easily tested or measured
• Orders must be handled separately through each platform interface
• Customer service and returns must be handled separately on each platform interface

These problems all can be characterized as serious time-sucking issues that need to be regularly reviewed and checked manually. Non-unified order processing is also a major drain on resources, which results directly from using these manual ‘legacy’ systems. Sure, it may not take a huge amount of extra time to switch between platform interfaces to process a small number of orders from each one, but as your sales increase this ‘small amount’ of time adds up. Eventually, your sales growth will simply plateau because your business does not have the resources to invest in new lines or increased sales.

The next step is to use your own website as a central hub for all your sales – across all channels and platforms. This has now become an easy option, with several providers offering tools that allow full integration with your webshop’s ‘back-end’ to use a single database for all inventory and data field requirements, and using a single dashboard to monitor sales and process orders. A well-designed solution can simply ‘plug-in’ to your existing e-commerce (CMS) solution.

These are generally known as product feed management solutions, and they offer a variety of functionalities alongside the core functions such as listings and order management. These require literally no programming experience or special skills and are generally priced in such a way as to make them very attractive options (when you consider the man-hours saved).

These time-saving solutions are not just for SME’s that are aiming to scale-up with minimal friction but are also a vital tool for established brands that want to expand while ‘building-in’ lasting efficiencies (by updating existing processes) to ensure that they maintain a competitive edge in the long-term.

4: Not optimizing your feed data

It may seem like an optional extra, but once you have your feed already established it genuinely pays to spend time optimizing it to really make it work for each platform and channel. This way, you get the best ROI for the time spent setting it up in the first place.

Provided you are using a product feed management solution (as discussed above), optimizing your data is very easy. Many solutions such as ChannelEngine are able to take care of this for you by ensuring your feed always complies with the specific requirements for each platform or sales channel.

A huge advantage of these tools is the ability to test different versions of the text, images, and titles and to easily compare data on how well they perform. You simply can’t do that efficiently using a manual ‘legacy’ system.

5: Not repricing competitively to keep stock moving

Pricing is another area where optimization is desirable, and this is also easily achieved with the right feed management solution. Look out for a solution provider with a dynamic repricing tool, to ensure you always outsell your competitors until they run out of stock while preserving your bottom line.

The disadvantages of not repricing to reflect the state of the market cannot be overstated; if your prices don’t converge with the supply-demand curve, your stock will remain unsold while your competitors will have theirs flying off the shelves and recouping their costs more quickly to invest in future lines and further expansion.

Using the right product feed management tool will make this task easy, whereas it would be nearly impossible to accomplish manually.

Repricing is not just for keeping ahead of the competition. However, it can also be a vital tool for brands and retailers who sell essentially unique items. It is a part of a complete strategy aiming to keep stock, moving under variable selling conditions, and one which ensures long-term growth potential through increased liquidity.

Repricing does not always mean cutting prices either – rather, it is about meeting consumer expectations for the kind of good being sold, or their desired spend (often the case when buying gifts). A higher price can sometimes provide reassurance of the quality of goods – and this is seen most often in unique or luxury brands. Usually, some experimentation is involved here.

Finding the right price (at the right time) can be difficult to predict and quickly adjust using ‘legacy’ manual feed management systems, but with the right tools, a product feed management solution should enable the testing of multiple prices or discounts and provide a measurable guide to future success.

As with so many other things, using the right tool can be the defining factor in your online business success.