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What Matters in Ecommerce

Brett Raven, CIO, Big Red Group
Brett Raven, CIO, Big Red Group

Brett Raven, CIO, Big Red Group

The good old days

It’s 2001 and Amazon has been running for almost six years. Walmart launched online six months ago. Alibaba hangs out its shingle as well. RedBalloon launches in Australia - built by the programmer ‘down the street’ for $20k in life savings. Google Adwords is just getting off the ground, and we could buy a 'click' for about five cents. Globally, only 500 million people are online. Those 'early adopters' were just happy to have a few places to excitedly buy something using Netscape on their new Pentium PC on dial-up, and have it shipped to their home in a week. Or two. They didn't really think about comparison shopping, social proof, ratings or reviews, nor the encryption standard used to protect their data. Being ‘online’ was a novelty. It was the golden era of ecommerce.

Here’s an equation to consider:

500 million customers + only dozens of websites + novelty + cheap online ads + basics of tech = easy(er) money $$.

In the same year (2001), the dotcom bubble had just burst, cleaning up the myriad of questionable operators and organizations racing to an IPO and delivering next to nothing in return. During this time, technology providers could charge almost whatever they wanted, promising cool features and competitive advantage. Good programmers were very scarce, and were treated like a black box by the companies that hired them. There was an incredible amount of naivety back then - both by the investors that dumped in their cash, and the entrepreneurs and CEOs who were tech-savvy enough to know what they really wanted, and how to guide technologists to the end-game.

The problem with technology

Over time, people started to realize something very important. Creating technology that delivers on the promise predictably, is hard. Really hard. To this day, comparisons to similar traditional industries to help understand software product delivery fall short. In some cases, it's a bit like trying to build the plane as you fly it, and sometimes just as white-knuckled.

The complexity of software delivery is still hard to manage, but thankfully there are mature processes for this. Projects tend to fail due to mismanaged expectations, missing or incomplete requirements or the good old iron triangle of constraints;

(Hint: you can't have tight schedule with not enough resource and lots of features in-scope …)

The recurring entrepreneurial discovery - "If You Build It, They (may not necessarily) Come" was rife. Shiny new technology does not equal automatic success. This applies not only to tech companies, but anyone that uses technology (whether or not you built it yourself). There will ALWAYS be something that either doesn't work as expected, or doesn't work at all, or gets out of date (quickly) or is missing a feature. Go in with your eyes wide open. With patience. And don't buy Version 1.

The problem with online retail

It's no longer 2001. In 2019, customers are switched-on (and there are 4.4 billion people online). They have of choice - the balance of retail power has officially shifted to the consumer. It costs $25-$50 per click for some retail keywords (not five cents) - so the stakes have never been higher to get your offer right, because your prospects are expensive to find, and harder than ever to keep.

In Australia, for the longest time, retail has been playing the margin game. It used to be the norm to fork out $200 for an average pair of jeans. The market is just too small to survive on the limited volume of sales it provides. So is the cost of shipping to the last mile (it's a big country!). It's the way it has always been. Until now...

Consumer novelty has worn off. Excitement has turned into an insatiable demand of absolute minimum expectations;

• Your page takes more than four seconds to load on my iPhone? Cyonara!

• I need to enter my postal address manually? See you later.

• This product has a two-star rating? Meh, no thanks.

• I can find this for 20 percent less on eBay with free shipping? That’s the sound of my wallet closing.

And that last point is what really keeps retailers awake at night; competing with global (faceless) behemoths, with deep (often tax-dodging) pockets that are buying the market at a loss. Margin erosion is a thing, and it's front and center.

But there’s nothing like a wolf barking at the door to inspire innovation… and the message is crystal clear = 'Black Friday, Cyber Monday, Click Frenzy, Boxing Day Sale pre-Xmas, EOFY, Fathers Day Sale, Mothers Day Sale, Free Shipping, No Credit Card Fees, Free Returns… the list goes on'. The usual margins that help carry you through the quiet times of the year are dwindling. Retail is in a recession, right now in Australia. Unless you are different - you are done. Why would anyone pay full RRP anymore? We are training the consumer to sit, wait, compare. And the retailers? Not happy, Jan. And who loves margin erosion? Your aforementioned big, hairy international competitors - hoping that their volume-subsidised bottom lines and tolerant investors (whom still haven't seen a profit) will keep them afloat long enough to see the demise of the little guys.

So, what can you do about all of this? Focus. Innovate carefully. Do more of what you do well. And if at all possible, do NOT join the race to the bottom (i.e. always on sale). Here are some of the things that really matter in ecommerce today;

• Technology will only get you so far. You need to execute, measure and execute again. Choose carefully, and squeeze the life out of any tool you invest in, before you jump to the next one. And if you are building something, expect it to be harder than you think.

• Make damn sure your data is valid! Google Analytics can be your friend, or if misconfigured, your worst enemy. Take the time to set it up properly, or find someone whom can. Do this first!

• Optimize your channels intelligently. Is SEO giving you returns? Invest more. Does SEM convert better - find a budget that works for you but have a clear strategy and execution path. Its not set and forget!. Both SEO and SEM take constant care - but tools like Albert (an AI ad management platform) from Marketics.ai can help (let the machines do the heavy lifting)

• Nail the UX, on the busiest device type/browser first (I bet its mobile, and probably iOS - check your numbers). Seamless, and simple.

• Make it dead-easy for people to spend money. Checkout experiences can make or break a business. Single page, autofill, ApplePay - you can search for tips via Google - but focus on this well - as it has been a LOT of work to get someone from a search to checkout.

• Listen to your customer! They will tell you in the data behind their behaviour, or directly in reviews and feedback.

Choosing, and using technology for online retailers has never been more complicated. You cannot do it all at once. But start somewhere, talk to your retailer community members, share the knowledge and find ways to protect your margin.

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