E-commerce and, above all, the right marketplace strategy are regarded as central factors for overall sales success. Nevertheless, many companies are still far from exploiting this potential. Why is that actually? An interview with our senior consultant Maximilian Wäger.
Voice commerce, AI in e-commerce, sustainable commerce. Hardly any other field of business is as dynamic as e-commerce at present. Digital commerce is therefore a key growth driver for the economy. Maximilian, just how well are companies positioned so far?
Maximilian Wäger: It is always difficult to give a general answer to this question. However, practice shows that many manufacturers and retailers focus on their own shops and various retail partnerships in their online strategy. They are hesitant to become active on other platforms to avoid becoming dependent. Alternatively, they shy away from the effort and do not have the necessary know-how. But in doing so, they fail to participate in the enormous, growing economic success of marketplaces.
Is this an argument mainly for Amazon?
Yes and no. First of all: The Amazon marketplace is the most popular shipping company for Germans, with sales in this country exceeding 20 billion euros in 2019. The product range is estimated at well over 250 million items. No wonder, that 82 percent of all Germans start their product search for an online purchase at Amazon – in all probability they will find what they are looking for there. Against this background, it naturally makes sense for companies to have a presence here. However, an “Amazon only” strategy does not do justice to the opportunities and possibilities offered by marketplaces as a whole.
Because a number of other players have now established themselves in this area – including local suppliers such as Otto and Real, but also Asian heavyweights such as Rakuten and Alibaba. Many managers are not at all aware of the distribution channels that are available to dealers and manufacturers within these ecosystems. They are also unaware of the advantages that can be offered to them by up-and-coming players like Real.
What do you think is the difficulty in practice?
It starts with the fact that many manufacturers and retailers have not developed a dedicated e-commerce strategy, or even mechanisms for monitoring success. A recent survey by Internet World Business provides shocking evidence of how less professionalism companies have in running their marketplace business. 17 percent cannot quantify how high the sales via this channel actually are, which also makes efficient control impossible.
Are companies thus giving their sales channels the wrong priority?
Definitely! The focus of top management in many companies is still predominantly on classic retail, which is, however, declining in many areas and can only survive through far-reaching innovations. The companies fear above all the additional expense associated with more sales commitment on the Internet and express concerns about excessive dependency on successful marketplaces such as Amazon. A lack of channel-specific knowledge also represents a major barrier.
But the corresponding know-how can be built up internally, or?
Basically yes, but many companies shy away from the effort of building up appropriately trained staff or hiring qualified agencies. In most cases, classic sales staff or even interns take over the part, but they lack the platform-specific know-how. There is also a lack of willingness to invest in the necessary technological infrastructure. As the company becomes more international, the complexity of e-commerce increases.
The various marketplaces are often still managed in an isolated and decentralized manner across different national companies. This can result in silo structures in the organization, which lead to considerable inefficiencies in marketing and sales. The consequences are an inconsistent brand image and inconsistent pricing policy across the individual platforms.
So how should companies approach their marketplace or e-commerce strategy?
We have developed a Nunatak Marketplace-Framework in five key dimensions. If the right levers are applied in these dimensions, the full online sales potential can be tapped in the long term and customer focus can be optimized.
That still sounds a bit abstract. Can you fill it with life?
I’d like to, but that would really go beyond the scope here. If you want to know more – just contact me (email@example.com).
Maximilian develops cross-industry digital growth strategies for Nunatak customers. An accomplished publicist in management consulting, he specializes in the digital transformation of established corporations. Maximilian studied business administration at Edinburgh Napier University and completed his master’s degree at ESB Business School. His passion is alpinism.