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4 essential elements to win in e-commerce

Prakash Natarajan | April 6, 2015
Prakash Natarajan lists four foundational elements which need to be considered for success in e-commerce through the lens of a manufacturer in the CPG industry.

Sizing the supply chain

The traditional supply chain in the consumer goods industry is geared to deliver in bulk at stores. However in the e-commerce world, one is expected to deliver at the doorstep in smaller quantities as well. This has a direct impact on the physical flow, information flow and financial flow. One has to make sure that the supply chain is re-engineered for this, or else it will eat into margins and profitability. A recent survey by Ernst & Young (Re-engineering the Supply Chain for the Omni Channel of Tomorrow) highlights that 81% of senior supply chain executives surveyed from consumer goods and retail companies believe their supply chain is not fit for purpose.

Partnership with partners

E-commerce offers the manufacturers a new opportunity to go directly to consumers (B2C). This not only benefits the manufacturers but also offers distinctive advantages to consumers through lower prices, avoidance of queues, 24x7 availability and so on. Manufacturers should think through how this impacts their retailers and avoid channel conflict with them. An entry with differentiated or customised products (e.g., different pack size) or unique product lines (e.g., Hindustan Unilever 'direct to consumer' model for Ayush and Aviance brand range of health and beauty products) could be a good approach. It is however, important for manufacturers to engage with retailers, distributors and others in the supply chain to have a win-win strategy for all.

Consumers, like in traditional brick and mortar shopping, would be interested to have a choice of brands, quality customer service and no doubt the best prices while they purchase online. Consumers may not only buy the products of your company, but a whole range of other brands and products to complete their weekly shopping basket. Online retailers are key players in a successful e-commerce strategy, and still play a vital role in providing this diversity of choice, that may not be available from a single manufacturer's online platform.

There are other important elements such as having a secure payment infrastructure, robust e-commerce technology platform including big data and analytics.  Whatever the strategy of e-commerce, it is most important to have your consumer at the centre and evolve your framework around it.

 

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