E-commerce route-to-market strategy

Pablo Foncillas

After years of dedication to the subject of electronic commerce, having published cases and given dozens of conferences in uncountable forums, I have realized that e-commerce has two very different connotations for companies: sometimes it is understood as a savior and a huge opportunity, and sometimes as a threat that is going to cause a cataclysm of unforeseeable consequences.

"In my opinion, there is reason to think in either of those directions, depending on where one finds oneself within an industry."

A preliminary thought would be that, although I have verified that electronic commerce awakens considerable interest among executives, it cannot necessarily be considered a reliable variable. After mentioning e-commerce, I usually hear three words: “nephew, cheap, and control.” Let me explain. Once the executives recognize their interest or worry regarding the way to evolve in the area of e-commerce, they usually mention a nephew of theirs who is good at creating websites, their will to spend as little as possible because they have heard that the Internet is cheap, and their wish to control the online space. Therefore, a first conclusion is that the challenges of electronic commerce, many and complex, are not faced with the required professionalism.

A different approach is needed. Say, if electronic commerce were a type of music, we would have to acknowledge that it is completely new and then learn how to dance differently. This requires understanding at least six components for building the keys to exploiting the advantages offered by this new way of transacting. Continuing with the musical metaphor, these pieces would be: the stage where we dance, or the context; the public, or clients; the several dances, or typologies of e-commerce; the dancing technique, or necessary steps of e-commerce; the disc-jockey, or board of directors; and the coach, or steering committee.

1. The context
E-commerce is growing at a dizzying pace. For example, in the Asia-Pacific region it has reached almost 35% in some categories. In the USA, the size of the opportunity is bigger in B2B than B2C (doubly so according to Forrester).

2. The clients
How many languages do you think you need in order to make the most of the potential of e-commerce markets? Well, three or four, because the markets that buy the most per volume are the USA, United Kingdom, Germany, Japan, and China.

3. The typologies of electronic commerce
It is interesting to highlight that it is a confusing, continuously-changing environment. Meaning that there is not only tabletop PC computer electronic commerce, but mobile as well (cell phones and tablets) and that of Smart TVs, like the Samsung TV platform that allows transactions directly through the TV. Besides the device used, there is also behavior to take into account, like social e-commerce — incentivized by social media — which is currently on the rise, or the so-called sharing economy, which consists of sharing physical or human assets. We are heading towards a consumer society of 4 Cs (Community that shares, Communicates, and Contributes to Commerce).

4. The necessary steps of e-commerce
In short, there are four: navigation, information, customer service, and logistics (which includes everything from packaging and sending to billing). From these four links in the chain, it is fundamental to understand that you are only as good as the weakest link.

5. The board of directors
According to a recent study published by Harvard, the number of experts in digital environments within boards of directors is absolutely minimal. Out of 300 companies analyzed in Asia, Europe, and the USA, with over 3.000 directors studied, fewer than 20 companies had boards with at least 3 experts in the field (6%).

6. The steering committee
Without a CEO with a vision regarding electronic commerce, it is difficult to succeed in e-commerce. The CEO will have to make difficult decisions, like joining new areas under a new client leadership organized around the consumer rather than around functional areas. E-commerce can be summarized in two dimensions: the human factor and the technical. But all of them, nevertheless, require learning how to dance to a new type of music. Do you want to dance?

Start practicing the six steps.