Yvonne Karolin: The E-commerce Project

We felt that there was a lack of insightful articles about e-commerce for larger retailers, or for bigger companies investing in e-commerce as a complement. Here is the first article in our series, written by our guest contributor Yvonne Karolin. She will introduce herself.

E-Commerce Project – Things To Consider

I have worked as an e-commerce manager, head of e-commerce development, head of digital development, and in various leadership positions within several large retailers in Sweden throughout my career. Today, I work as a consultant, and here too, I focus on digital sales across various areas. To be able to realize this, I studied system science in my early years.

I studied at DSV for a Master’s degree (Data & Systems Science at Stockholm University) and in the early 2000s, I took a separate course in e-commerce. This was before I even knew what I would specialize in, but it was a subject that interested me. I looked through this particular course literature (one of the few books I have kept) recently when I found it in the attic during a spring cleaning. And I was surprised.

“But there was really nothing about sales, there was no concept of marketing, and usability design was not relevant either.”

The book talked about all the different functionalities required to start digital sales in a manufacturing company. Even today, I have a hard time understanding its reasoning from a sales and strategic perspective. It tried to explain integrations and IT protocols, system environments, and dependencies. The book described an e-commerce project and an e-commerce architecture. But there was really nothing about sales, there was no concept of marketing, and usability design was not relevant either. The book lacked reasoning about process changes, optimizing production processes and purchases, or even the idea of early optimization for multichannel sales.

It is so clear today, and it’s recurring in projects, that this is often what’s complex in truly succeeding with e-commerce projects: building a solid bridge between technology and business that bridges profitability. Business architecture (all business processes and routines in the company) versus IT architecture (applications and hardware to support business work). Where the IT parts always have to solve everything via standard systems, but what everything is, “no one has figured out”. Also something I studied years ago, but never quite understood its value, not back then. Delivering a project – that’s a whole different matter, a clear start and end.

Today, after a dozen e-commerce projects of various kinds and sizes, I know that this is what creates friction, budget overruns, opposing thinking, and progress issues. The business side has not quite understood what should be done strategically, tactically, and operationally, but sees the platform itself as contributing to building e-commerce. The project itself will likely land, and it’s here you’re initially measured. But primarily, the technology mindset and technology focus create a silo that prevents future expansion and growth. And even though e-commerce projects are often influenced by the business side, it easily becomes, for this reason, an IT project initially. The business side needs greater involvement and significantly more responsibility early on. Why? An e-commerce project is primarily a natural evolution within your regular sales, driven by technological advancements, but based on the new needs of your old customers and your new customers. So, to succeed, a fundamental business development effort is required. A task that’s not directly tied to an IT platform choice and “simple digital sales.

The e-commerce project enables business change. From IT to business. Where you, as the client or creator of the e-commerce, need to think anew, and you need the support of your entire management team to do this. Using technology to create upselling, but doing so from a holistic perspective for your entire company. And once again, this is where the difficulty comes in: building sales channels and strategies for the future and future customers.”

Unfortunately, e-commerce projects often start with technology

As I mentioned initially, e-commerce projects often begin more or less from a technical perspective, and this still happens today. Unfortunately, businesses don’t start by changing their core business, service, or customer offerings. A change in a company’s business can, for example, initially involve deciding to sell to a new customer group in a new country in your e-commerce platform. Yes, the platform supports this, your payment partner connected to your e-commerce platform supports this, and your distribution solution supports this. But the consequences are not only IT-related. You need to consider the business side of things and how far you can take these changes in your business. Business-wise, for example, this could mean a change in messaging to customers, to your salespeople if you have any, production and direction of external and internal marketing, changes in financial flows, accounting, and VAT handling. Changes to bank account setup, changes to customs account management, changes in customs warehouse handling and incoming flows, changes in business setup concerning packaging and distribution. Perhaps even a change in the production of your products in terms of ingredient lists, branding, labels, or material choices. And what I’ve mentioned so far is only a small part of the flows in which you can start your business development.

In an e-commerce project, the journey often begins with a platform choice, and it’s not uncommon to almost immediately, or in conjunction with this, choose a supplier to support the implementation work—often a technical implementation partner. This partner may have never worked with the business aspects of multichannel. The work begins, at best, with an RFI or an RFP, where you as the client have actively created a general set of requirements. This requirement specification often varies in quality, depth, and coverage. You make your choice, and now your project begins… yes, a technical project.
And yes, it’s agile. ☺
But you have yet to fully realize the benefits of the technology for your entire business, as these processes haven’t been deepened yet.

So, congratulations, you’re up and running, and soon you’ll have your e-commerce platform live. Depending on the requirements, resources, complexity, and so on, it could take 1 to 12 months of project time. Then, sales start rolling in. Since all the numbers you’ve seen say that all sales are moving online and growing on the internet, you expect to have a conversion rate (the percentage of visitors to your site who make a purchase) of 3%, and your e-commerce will become your largest sales channel overnight. Perfect! It’s that easy! Or is it?

But what was it that you really wanted to do, and is it really that simple? Is it about building a technical e-commerce platform that is strategically correct or about optimizing your future sales? Let’s look at the approach for optimizing future sales, because that is what true digitalization is—it’s not about “implementing an e-commerce platform.

The Customer: Understand Your Customer of Today and Tomorrow

Conduct a feasibility study: What does your customer demand today, and what are their needs? Where are your customers today, and how will you act to meet them in the right way?
Key takeaway: Create a clear picture of the customer’s service needs and persona (personality type). Deepen your understanding of who the customer is, where they are, what they want to do, what’s important to them, and what makes them choose you. Consider the customer’s future needs. Dig deeper and see what other industries are doing—not just those in your own industry, but see what’s digital today. For example: Look at the payment method Swish. It has simplified everyday situations for many people. The class fund (which you, as a class parent, need to handle for your child’s school) easily and smoothly facilitates payments for class activities. Why should a payment in a department store or online be so complicated and, for example, require 3D Secure? (3D Secure = Mastercard and Visa’s security validation for card payments.) Can we simplify for the customer?

Competitors: Learn and Listen

Dive deep into your competitors’ strategies: What are your competitors doing that’s good/bad? What do you need to do better? But remember, all of this should be based on your customer’s needs. What are the new start-ups doing that have succeeded? They don’t have to be in your industry, but they’ve gained customers because they found a niche.
Key takeaway: Focus on finding service offerings that customers prioritize and are drawn to, then apply this to your own industry’s customers. Note that your competitors today may not always be in your own industry, so broaden your research to cover more areas. Who would have thought that Klarna would start marketing sales when they began their journey with invoicing? But that’s what’s happening today—not just with Klarna, but with other actors as well. We see a blurring of industries that move across customers’ needs.

Goal: Understand Your Budget and Its Consequences

Not new. But not always clear. Set clear and specific total sales and cost targets. Ensure that everyone understands these and what is expected from each individual to achieve the annual budget. The entire management team should understand the budget and have discussions on how it will be achieved. Or, if you’re an entrepreneur, you should have worked through your own planning thoroughly and understand its relationships and consequences.

The budget should consider: How do we go about selling more than we do today with the new customer behaviors/needs we are seeing? What is important to our customers? Who are our customers, and who should be our customers? What are our competitors doing? What are other actors doing, who are not our direct competitors, but whom our customers find valuable and use? (For example: Why do customers use Uber taxi?). What could our company simplify in a similar way? What’s happening in our environment that we must adapt to? A discussion around change.

What do the new sales channels and the new type of service we want to provide mean? Who is responsible for these? What new costs come with this?

Examples of these new costs might include, among others:

• Costs for Product Enrichment: Product enrichment involves providing detailed descriptions of a product sold to the end customer through text, selling descriptions, various product attributes, benefits, and possibly manuals.
• Costs for Photography: Photography in the context of securing images for your online site, images for marketing, and image material for various types of content. Photos need to support various resolutions, angles, details, and different hardware devices (mobile, iPad, desktop).
• SEO (Search Engine Optimization): The costs associated with ensuring search engines find your digital site first and fastest over all others. Costs incurred here involve technology, strategy, and operational execution.
• SEM (Search Engine Marketing): Costs for paid digital marketing in various forms. There is a multitude of different initiatives. These initiatives fall within different types of disciplines.
• Customer Service: Increased customer service is necessary as customers require it. Will your customer service support all languages? Will the opening hours be 24/7? Will it include phone, chat, email, and possibly even a presence on current social media channels such as Snapchat, Twitter, or Facebook (already established)? This will increase personnel costs.
• Logistics: Picking for direct-to-customer distribution is very different (and more expensive) for a warehouse compared to optimizing picking and packing for business-to-business customers.

When changes occur in your original business model, costs will also change, and they will overlap between new and existing functional areas. Consider which new, existing, and additional costs need to be redistributed. Establish their levels and responsible parties. Examples of costs that change include:

Marketing

Should marketing costs, which previously may have focused on brand building, now shift to being directly sales-driven? Should the cost remain within the marketing area or be shifted to sales? Digital marketing (as opposed to traditional advertising like billboards, newspapers, etc.) in some respects has a one-to-one relationship with sales. These two disciplines (brand building and sales) look very different and are often driven internally by different personality types. How can this be changed and why? The goal is to sell more.

Inventory

Should the cost of your new e-commerce inventory be charged to the warehouse manager, even though there is a need to make the entire range visible for your online customer from a brand perspective, because customers today are in the digital world before and after the physical store visit? Physical inventory at the distribution center takes on a different meaning than it did before. However, in most income statements, this remains a challenge for the logistics manager. Can you scale up in the digital world?

Key Takeaway: Establish clear responsibility, accountability, and cost ownership. Communicate these aspects and follow up. It’s also crucial to change your previous tracking model and your KPIs (Key Performance Indicators) when you make changes. Otherwise, your whole team won’t be on board for the transformation journey, and you could miss out on optimizing new digital initiatives if you don’t consider these factors.

Processes: Cost and Profit-Driving

Which processes in my company need to change? Which ones are costing money today, and which are less efficient? Is the whole organization supporting my new sales channels in the right way—both the existing ones and those I need to explore in the future?

If I am currently B2B (business-to-business, selling from producer to retailer), should I move toward B2C (business-to-consumer, selling directly to the end customer)? Or should I go from B2C to B2B? Or perhaps C2C (consumer-to-consumer, selling between end customers, for example, creating a platform like Blocket)?

If I currently only sell self-produced goods, should I start selling goods from other suppliers, or sell through other suppliers via additional sales channels?

And based on the above reasoning:

How can the different business processes already in place at your company be optimized for these changes?

Think about the processes: It’s not always necessary for all capabilities to lie within your own company—it’s difficult to be an expert in everything. Which processes should you handle internally or externally to achieve optimal profitability and support your future roadmap and progress? Which processes are critical for your business?

For example, you might choose to photograph everything in-house with your own studio. This could be strategically important for you to keep internally, as it allows you to present your products in a way that you can control, and potentially at a lower cost.

Key Takeaway: Transform the processes that need fundamental changes, based on what you want to achieve in the future and where you want to position your business.

Business Architecture: Map out your business

Create a visual representation of the above scenarios after completing your entire business development process. This should include flows, processes, and the overarching routines of departments that describe your business. Map and define the processes you want to change, and link these to responsibility, profitability, and your budget work.

Key Takeaway: Continuously and iteratively communicate this to your entire team and invite collaboration around this work.

Platform: Technical Solution

Digital and online solutions aren’t just a new part or a new system. They could already be in place, or they could be something new. When choosing components for your entire sales strategy solution, this could include things like the web frontend (CMS, Content Management System), email system, POS (Point of Sale), CRM (Customer Relationship Management), ERP (Enterprise Resource Planning), WMS (Warehouse Management System), OMS (Order Management System), distribution platforms (such as Unifaun, Memnon, Pacsoft), payment systems (such as DIBS, Adyen, PayPal, Klarna), analytics, follow-up tools, site optimization tools, marketing, and issue management systems.

Key Takeaway: Think through all the parts, but perhaps don’t build everything in step 1. Prioritize what’s most important first, and be thoughtful about how you approach this.

Organisation: Team and Responsibilities

Who is responsible for what in the new sales channel? There are many new or changed tasks. As mentioned earlier, these could include things like product enrichment, materials for the website, images and photography for the products, content strategy, email marketing strategy, and the operational execution of the entire sales process, customer service, and tools.
Key Takeaway: Clearly communicate responsibilities and think strategically about your approach.

Implementation: The Project

Project plan, project budget, project activities, follow-up, timeline, steering groups, decision logs. Requirements, solution design, development, testing, deployment, and handover to operations.
Key Takeaway: Ensure project management responsibility is clear and that you have an efficient project delivery process.

Business Go Live

Site population and content. Ongoing operation and maintenance of your sales channels… and as I always say when going live with a new sales channel—this is where the real work begins… Let’s go!
And hopefully, we have the capacity to manage this in the organization with the routines we’ve identified earlier!
Key Takeaway: It’s essential that operational routines are established early in your business development phase.

In the End:

The scenarios above probably don’t describe much of a difference from what you initially expected for your e-commerce project. But I want this to make you think differently from the start. I want it to represent an approach to building the right foundation, making the right choices, looking ahead, holistically, and driving change at the core level. Business before technology. The e-commerce project is an opportunity to reach new heights and transform your organization—to digitally evolve your business and your team to start the journey into the future.

Use this opportunity wisely, because it’s your only chance to build a future-proof company. The big thing today is not just e-commerce. It’s a digital strategy that leverages opportunities for sales growth by selling more, in new ways, to new and existing customers by expanding your current reach through technology and innovation. All of this is pure business development, but it requires courage and a willingness to do things differently, and to let go of everything you once thought was correct about your business model.