I put out a survey two weeks back about e-commerce enablers to find out the sentiment towards these companies in ASEAN, if brands actually use them (why or why not), and areas where they believed partners could improve.
The answers I received were not what I expected.
60 percent of respondents reported using an “e-commerce enabler”, but given their answers, most didn’t understand the difference between a marketplace and an enabler.
Very simply put, e-commerce enablers are service providers that help a brand execute its digital strategy through a one-stop solution. This solution encompasses content production, web platform optimization, performance marketing, technology to integrate all digital channels, all the way to customer care, fulfillment and/or delivering it to the end customer’s doorstep.
Ecommerce enablers provide a client with whatever it takes to sell successfully online.
Lazada, Shoppe, 11street are not e-commerce enablers, they are the platforms for businesses to sell on. Sure, they might lend a brand an account manager who periodically checks in but their goal is to push for lower product prices and exclusive channel promotions.
The marketplace is neither charging the business for this service or providing special treatment – if a better performing merchant comes along, it catches you later.
This is why Alibaba’s Tmall has its own list of Tmall Partners – specialized agencies that build functional stores for businesses on the Tmall platform. Tmall itself is not the enabler.
The same goes for marketing platforms such as MailChimp, payment gateways like Paypal and delivery companies like Kerry Express or NinjaVan – they may not be e-commerce enablers but they are important pieces of the e-commerce supply chain.
This distinction is vital to the growth of e-commerce in Southeast Asia, especially as most global brands – Samsung, Unilever, L’Oreal, etc. – are choosing to outsource their e-commerce BUs to other experts.
Why? Because in-house teams aren’t sure how to structure themselves. Over 65 percent of global marketers feel teams are “somewhat integrated” or “broken out by channel”. For e-commerce to work, Marketing needs to align with Sales and Service.
But e-commerce isn’t a magical band-aid capable of fixing all problems – especially not corporate silos.
Aื FMCG industry leader recently asked me, “what is something you would do to improve my brand’s digital strategy?”
“Establish internally what the business wants from e-commerce, who’s in charge of this division and the resources the business is willing to dedicate before even bothering to bring on an enabler. Without internal alignment, it becomes one inefficient mess and everyone ends up pulling hair.”
After working with some of the world’s top brands – Unilever, Microsoft, Reckitt Benckiser, Payless, Samsung – I’ve been fortunate enough to see how these well-oiled machines function and why it doesn’t necessarily work for e-commerce.
The beauty of digital is that it’s instantaneous, which is the complete opposite of how decisions are made in these enormous corporations. It’s new, it’s disruptive.
Online moves quickly and requires constant care because a store that never sleeps means inventory, pricing, recommendations, customer support need to be up to date 24/7. It gets even more complicated when the e-commerce enabler needs to manage a brand.com and a marketplace shop-in-shop (SIS).
What often gets overlooked by brands is the shift in power.
Dangling more visibility over the thousands of grey market and official sellers on its site, a marketplace will push aggressively for more deals, more exclusivity, more vouchers, now, now, yesterday, while the brand pushes back with the same tenacity, touting “channel conflict”, and scrambling to squeeze funds from other departments.
The brand finally ends up throwing paperwork at the problem two weeks past the deadline.
Certainly not the enabler.
How is it in 2018, we still don’t know how to do ecommerce?
As a marketplace, its job is to offer the best deals and shopping experience to customers to grab market share. It does this by subsidizing prices, and by nudging its merchants to sell more and offer exclusives.
As a brand, its job is to sell to as many customers as possible, keep its distributors civil, maintain brand consistency across channels and mitigate the amount of friction between departments. It does this by offering the same promotions to each channel partner, allocating resources in a democratic fashion and following processes to a tee.
As an e-commerce enabler, its job is to work with its client and e-commerce partners (marketplace, 3PL, payment gateways, etc.) to increase GMV by optimizing digital channels. It does this by executing on behalf of the brand a strong digital strategy, which sometimes means bartering with the marketplace for more visibility for its clients.
E-commerce enablers are by far nowhere near perfect. Imagine a marriage counselor trying to find a compromise between two hot-headed and egotistic partners refusing to budge but still looking to have a long-term relationship.
Oh, and sessions aren’t once a week, it’s an uphill climb every day. This respondent hit it on the head when describing what they did not like about its enabler.
“Not mature business yet.”
While the concept of e-commerce is not new in the world, the execution, talent, and best practices are still nascent in Southeast Asia.
Customers in APAC need education on e-commerce, a company’s e-commerce team in APAC needs education on how to work with other departments, and marketplaces in APAC are still figuring out how to be more like Alibaba and Amazon, two companies with over 10 years operating experience.
An e-commerce enabler is supposed to have all the answers. While a challenge to take on, especially in Southeast Asia, it’s a hot business with a lot to gain, and probably why ecommerce enablers have popped up all over Southeast Asia and India.
And it’s been somewhat positive for respondents using an enabler as the majority would recommend it to a friend or colleague.
“Getting an e-commerce enabler should definitely be considered, regardless of what stage a business who wants or is doing e-commerce is in.”
“Allows me to focus on my core business capability and rest assured online segment is still moving along.”
Now that the distinction has been made between a marketplace, a payment gateway, a marketing tool and an e-commerce enabler who ties them all together, a business needs to decide whether it needs marriage counseling.
Is it more cost-effective to invest and build a team to manage digital channels in-house or outsource it to a third-party partner? The survey respondents listed reasons why they work with an enabler:
“Aligned with brand principal interest and cost effective”
“Short time to market, revenue growth”
“Strong communications, effective operations”
Now you’ve identified you need one, how do you choose an e-commerce enabler?
- Assess the experience of its leaders – do they have a strong track record in high-performing digital businesses?
- Assess the existing clientele – are you in a similar tier/size/industry?
- Assess the company’s own digital footprint – their performance marketing will be telling of the performance marketing they do for you
- Assess the scope of work – is the enabler incentivized to sell more for your business?
And now take a look at your own business and decide whether it’s ready to commit to e-commerce. Is there an efficient approval process in place for resource allocation and commercial sign off for digital channels? Is there a C-level stakeholder responsible for P&L?
If not, time to move fast because, in the digital world, it’s either give all or risk losing a lot.
Originally published on ecommerceIQ