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The lies of eCommerce

ECommerce is dominating. Everybody needs to be part of the game. We hear it is easy, it is cheap, it is fast, everybody can do it! In theory yes but let’s analyze what eCommerce truly is and what does not make it as easy, cheap and fast as we may think.

ECommerce is an expertise. It is not for everybody. Taking an executive who does not have any experience in eCommerce to run this new channel for you is doing nothing good. ECommerce is about marketing, technology, merchandising and user experience. Merchandising in eCommerce is a completely different skill set than merchandising in store for example. User experience is a completely unique skill set to eCommerce and a lot of ‘’traditional’’ retailers do not even know what it is or know that it is needed. Java, open source, API and SOA are all barbarian words very unique to eCommerce.

Let’s look at easy. I would say no, it is not easy. It does require experts and not everybody can do it if they want to do it right. These are all skills that are not extensively available in the market. Opening an eBay store is easy but thriving at eCommerce overall is a different story. Everybody wants to be there because it is the place to be but succeeding is not as easy.

We say it is Cheap because we compare it to store infrastructure costs. With eCommerce there are other costs to take into consideration:

· Shipping: this is one of the most expensive cost eating the margin. Let’s be honest customers DO expect free shipping all the time. In a very near future, free shipping will be a given for customers and etailers will have to deal with it, either by increasing their prices, or by reducing their margin. I certainly believe that the second option will be the one as customers do have so many choices today that there is no way they will be willing to pay more for shipping for a product.

· Platform: the cost of the technology is real. An eCommerce platform has a cost to be maintained, enhanced and advertised. Even if you take an open source, it does imply that you have an engineering team capable of making the changes on the site and these are costs you did not have with your physical store.

· Experts: eCommerce experts like SEO, product managers, engineers and online merchandisers do cost much more than store associates so your headcount cost might grow.

What about fast now? Yes you can build an eCommerce site very quickly (matter of weeks) so this is the part which is true when we talk about fast. When it comes to sales, it might be slightly different. You have a store, customers walk in because it is nearby. With eCommerce, the local effect does not exist so you have to reach out to your customers and have them come to your site. This takes time! First it takes up to 60 days for search engines to reference you (this if you do everything right). Then you will keep fighting to keep your place high on SEO and this will take time and energy. You will constantly be competing with other sites and it is easy for customers to have direct access to competition…actually it is one click away so it is harder to keep customer loyal. Customer versatility will be higher.

ECommerce is table stake…but eCommerce is not as easy, cheap or fast as we might hear it too often. ECommerce is an expertise and too many people forget about this. Would you hire a dentist to be a doctor? Not sure it would work. ECommerce is magic and fascinating when we do it right.


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