What is your eCommerce Strategy?
Is there a strategy for success that can be learned from the mistakes of 2019?
2019 has seen a downfall of some big brands and there are common denominators in every failed business. The increasing costs of rent or real estate, the reluctance towards, or slow development of technology supporting an eCommerce strategy and a lack of understanding and responding to the changing consumer landscape.
There seems to be more businesses every day in the news filing for bankruptcy or calling in administrators. Filing for bankruptcy does not necessarily mean that the business will close, it could be for strategic restructuring. When we walk down the high street we see closed shops, going out of business and sales signs in windows. But people are not going to the high street any more.
Some Businesses That Filed For Bankruptcy in 2019
Forever 21 - A family owned business that grew to the 5th largest specialty retailer in the US filed bankruptcy. Critics claimed that a poor choice in fashion products, poor quality clothes and not developing their digital presence contributed to the downfall. They have also been accused of not knowing their customers well enough and not listening to popular demands.
Barneys - the luxury department store in New York with 22 stores across the US is filing for Bankruptcy and closing at least 17 of its stores. Citing a Challenging retail environment as one of the factors for closing and increased rental costs as another. Both of these could have been managed better if their eCommerce digital sales were prioritized.
In 2018, Toys R Us went out of business after 70 years of successfully selling children's toys and clothes to a global market. Many adults were saddened by the news and remembered their weekend trips to the store fondly.
Some other stores to have filed for Bankruptcy in 2019 are:
- Payless Shoe Store
- Diesel Jeans
- Gymboree
- A’Gaci Fashion Retailer
- Destination Maternity - the world’s largest retailer for maternity clothing
In the UK there have been some big names struggle in 2019 and hitting the headlines for all the wrong reasons:
Thomas Cook are the biggest name to go into administration in September 2019. With a loss of 560 high street stores and over 9,000 staff badly affected there are several theories as to what went wrong. A lot of people suggest that competition from online suppliers and Thomas Cook not modernizing digitally were some factors. High overheads of stores and staff, with low investment in online eCommerce sales again a factor.
Albemarle & Bond have closed 113 stores, whilst the owners say that they are still solvent, they are looking to sell or close their stores.
Karen Millen and Coast closed some stores, and look like they will close more, but since they have been bought by the online retailer BooHoo, their products remain in the market and there is a chance of revival.
The Money Shop - another UK Based high street pawn, lending, check cashing and foreign exchange shop - has closed a lot of its stores due to loss making and pressure from the FCA.
Debenhams is a UK Cultural icon in the retail world. It went into pre-packed administration in April 2019.
The value fashion brand Select went into administration threatening 2,000 jobs and 180 stores.
OddBins and Wine Cellars Off-licences went into administration in January 2019
House of Fraser went into Administration in 2018 saying that a combination of poor trading, increasing rental costs, rising costs and lack of investment has affected the business that started back in 1849.
Shopping Malls used to be full of people
Malls used to be full of people all through the week. Now the coffee shops on the outside are full of foot traffic, and people using their mobiles to shop online during brief coffee breaks. There are some companies in 2020 that are looking at their books and figuring out ways to increase profits.
Missguided, a Manchester based fashion retailer, filed a pre-tax loss of ￡46m in 2018, compared to a loss of ￡1.6m in the previous 12 months
Even though Asos is valued at ￡220bn, it has reported that pre-tax profits have dropped 87% to just ￡4m for the six months to 28 February. They are confident of a revival due to heavy investment in digital technology and online sales conversions.
What we have always done, cannot be what you will always do
Looking through various websites the growing list of retailers closing, going into administration or struggling seems to be growing. Just because “This is how we have always done things” has got the companies to where they are today, does not equate to ensuring survival and getting the companies to where they need to be tomorrow.
Remember Vinyl records? They started the music revolution and are now archived in history. Moving from Vinyl to CD’s was a huge move, now it is all about the downloads with some artists clinging on to CD’s to protect their brand. All businesses must move with the times in order to stay current with the quickly changing behaviour of the consumer. If we can not keep up, we will get left behind.
Some of the common factors in these closures make me think that an out-sourced provider could help some of these situations. Combining out-sourcing with investment in digital technology and the growth of online sales could have saved some of these companies.
- Rental costs and real estate costs increasing. Web pages, a contact center and a Bespoke platform are much cheaper options.
- Are people shopping on the high street these days, or shopping more on-line? Statistics show that eCommerce now accounts for 16% of all shopping in the US and there has been a steady increase since the year 2000.
- In 2015 in the UK there was an online sales boom and in 2016 online spend overtook store spend for the first time, and only looks like increasing.
- People want to buy anywhere and have it delivered
- eCommerce is driving the growth of UK Parcel deliveries. Having the parcel delivered, then returned if it is incorrect is driving car, van, motorbike sales. It is also decreasing foot traffic in stores. People can buy from their mobile phone now instead of going to the shops. Asos stated that 77% of its online shopping has come from mobile devices in 2019. Being mobile compatible is crucial for businesses today.
- Click and Collect is on the increase. People buying online and then going to the store, or warehouse to collect their products is rising. It is still low at 13% of all deliveries, but it is the growth vertical in this sector. 70% of deliveries still go to the home of the buyer.
- It is expected that Amazon will account for 50% of all US online retail sales by 2021. Amazon is the biggest global retail organization, but only has 521 physical stores in the US (accurate as of April 2019).
Is There A Winning Strategy For 2020?
Simplify and Modernize. Reduce costs and increase options. Respond to your customers and give them what they want. A simple, fast service, available 24 hrs a day, from the comfort of their home, or to fit in with their busy lives.
People are clearly moving away from traditional retail activities. Amazon are leading the way in eCommerce and have huge call centers in the Philippines sometimes receiving over 50,000 calls a day.
We can offer bespoke solutions to fit the needs of your business. If you want to try out-sourcing with just one agent, we can accommodate you. If you want to start with 10 and build up, we have done that for several partners. An account can start with 10 staff and grow to over 100 in the course of a couple of years.
Our IT Development team can support your business by building bespoke solutions, sales funnels and operating platforms to meet your business needs. Our contact center can offer voice or non-voice customer service and back office support to take orders, manage customer service, process refunds, handle complaints, and keep customers aware of the delivery of their products. We can complete quick customer surveys so you are in touch with your customers.
We can speak to the delivery drivers, monitoring their progress with deliveries. We can help to organize pick ups from click to collect offers.
You focus on your IT Development, build up your online store, focus on your digital sales and platform. Building up your eCommerce strategy will help you to reduce costs, and increase sales. Reducing the need for a store, reduces rent and overheads. We can focus on your customer support.
Mind and Management onshore guiding your eCommerce strategy. Customer support offshore supporting your valuable customers and keeping them informed of their purchases or refunds, dealing with return policies, handling complaints and learning what they want. This combination could help save some businesses from following the path of so many in 2019.