Five Ways Brands Can Adapt For The Era Of E-Commerce
Brick-and-mortar retailers, from Sports Authority to Toys “R” Us, are closing stores or closing down altogether. It is a trend that has long been in the making, thanks to the success of e-commerce sites like Amazon, eBay, Jet.com and others, and has motivated traditional brick-and-mortar brands to change the way they operate. More options are offered online than in store, and it’s becoming more common for brick-and-mortar retailers to leverage their physical locations as logistics centers and showrooms — places where consumers can collect online orders or view products.
With e-commerce projected to account for 10% of all consumer packaged goods (CPG) sales in 2022 (compared to 1.4% in 2015), retailers are investing in new markets, building stronger digital marketing presences and adopting a wider variety of payment options to make the product assortment they offer more enticing to shoppers. And while brands must increase their investment in e-commerce to stay competitive, there’s no need to abandon brick-and-mortar sales channels altogether.
The ways consumers purchase goods and the demands they place on retail brands are constantly changing, so creating a flexible sales strategy that allows for quick reactions to evolving consumer preferences is the key to success. Consider the following ideas for developing a flexible sales strategy:
1. Consolidate inventory.
Many brands have different product pools for different channels. Historically, product allocated for e-commerce sales was kept separate from inventory allocated for retail sales. However, consolidating inventory into a single pool enables better accuracy and more control. For example, if sales are moving fast and one channel has a more rigid SLA, product can be allocated to those sales first to avoid potential penalization. So, before brands adjust their sales strategies, it’s wise to consolidate inventory; doing so will make a multichannel sales strategy more efficient.
2. Establish a two-day shipping network.
Consumers expect immediate gratification with online orders. From grocery delivery to two-day shipping (or faster), even the most obscure products can be delivered quickly, so it’s difficult for brands to compete if they cannot offer the same convenience. Building two-day shipping networks from scratch is expensive; finding a distribution channel or a fulfillment partner with an already-developed network is easier.
3. Leverage existing e-commerce channels for visibility.
[Full disclosure: Ingram Micro has client and/or partner relationships with Amazon, eBay and Indiegogo.]
Building your business takes time, so look for opportunities to cast a wide net and grow visibility. The easiest way to to do this is to leverage accessible and existing sales channels like Amazon, Jet.com and eBay, which eliminate most of the logistics for you and expose your product to a huge audience. Additionally, platforms like Indiegogo offer ways to test product validity and come with free marketing opportunities (especially if your campaign goes viral). There are two sides to every coin, though, so be aware that selling on a channel like Amazon Prime can be frustrating because these products are most commonly shipped from Amazon warehouses, where they commingle with products from various sellers (which reduces quality control). To avoid this, you can create a brand registry or do your own Prime fulfillment so that your products remain separate from the rest of Amazon’s assortment.
4. Use brick-and-mortar channels to increase exposure.
Though internet shopping is pervasive, 90% of all retail purchases still happen in physical stores. Many retailers want to increase the number of products in their stock keeping unit (SKU) catalog without filling their shelves with those items. If you can drop ship for these stores, you can grow your sales using their audiences.
5. Use your resources.
A problem many brands encounter is that they do not have e-commerce experts on their payroll to help grow business online. Adding an extra team or even an extra person to the headcount isn’t an easy proposition. However, your success on a sales channel is also good for that channel, so they may have a resource to advise you on growth. Look for a channel partner that offers strategic consulting as part of its service.
Adaptability is the future of retail.
Despite the shift toward e-commerce, brick-and-mortar stores aren’t going away. Toys “R” Us will turn into an online marketplace. FAO Schwarz is building toy stores again. Amazon is building bookstores. Brick-and-mortar retailers will reemerge, but will be more thoughtful in how they do so, using different fulfillment strategies (shipping lockers, same-day click-and-collect, etc.) to accommodate changes in consumer purchase behavior.
The bottom line is that retail is changing and will continue to change, but simply investing in e-commerce will not offer brands respite from competition. Optimizing operations and being adaptable to consumer buying patterns is the way forward in the fast-moving world of commerce.
This article first appeared on forbes.com on May 24, 2018