Snapshot : Not everyone’s a fan of online stores. Read about the lessons we learned from our first online store launch and the barriers to e-Commerce we had to overcome.
We’re big believers that in most cases, doing something is always better than doing nothing. That doesn’t mean you should do everything, you still need to pick the right things to do. But, we meet a lot of people in business who spend most of their time saying no.
Don’t do that. That’ll never work. We tried that before, and it failed.
You see it a lot with marketing innovation. As we wrote in a previous article, you’ll find a lot of critics in business who love to “protect” the interests of the business. They get in the way of creators who want to drive new ideas.
This thought was top of mind for us because of a new e-Commerce project we’re working on. In this project, we’re applying lessons from the first big e-Commerce project we worked on many years ago.
Because, the first time you do something, is when you learn the most. You always start from a base of little or no knowledge. And you learn by getting things wrong, as well as getting things right.
Setting up an online store for the first time
Just to give some context, this first e-Commerce project was to launch an online store for a big international FMCG business more than five years ago.
Even now, there’s not that many of FMCG businesses who have their own online store.
If you know our background, you can probably even work out which company it was. But the company itself is not so important in the story. The types of barriers to e-Commerce we ran into on that project happen in almost ALL big businesses.
Setting up an online store is like doing the decathlon
We’ve shared in other articles that setting up an online store is like doing the decathlon. You need to have multiples skills across marketing, digital marketing, IT systems, supply chain and finance to make it all work.
And in bigger business, that means you find internal experts in those areas. Except that if you are an expert in say, IT or supply chain or finance in a “traditional” business, it doesn’t necessarily make you an expert in those things in the context of managing an online store.
Setting up an online store brings its own set of challenges and differences. So, you need these functional experts to also have the flexibility and open-mindedness to apply that functional knowledge into a different area.
And that’s where you can start to run into some barriers to e-Commerce. Because flexibility and open-mindedness is not always what you’ll find.
Post-launch review documents
After we launched this store, we pulled together the team who worked on the project and produced a post-launch review document. This captured all the things we’d done during the project. And, what we’d do differently if we’d do it again.
With the decathlete model in mind, we themed the learnings into ten groups. We made learning relate back to one of the decathlon events. So, the 100m for example, we talked about focussing on the end goal and working at pace. The long jump we talked about the launch point, and how you need to get your timing right. And so on. It was better than it sounds now, talking about it.
But the “event” and learning which most sticks in our mind, was the 110m hurdles. Because, the hurdles or barriers were significant on that project, and on almost all e-Commerce projects for traditional businesses we’ve done since.
If you start your online store from scratch, you don’t have the same barriers, but if you already sell through traditional channels, then here’s some of the barriers (or hurdles) you’re likely to face
The barriers to e-Commerce we ran into – and how to overcome them
These are all based on verbatim quotes from people in the business on the project. In most cases, they were NOT from direct project team members.
We’d gotten almost all of the project team members happy to work on the project right from the start.
No, these quotes come from “stakeholders” and “decision-makers” round the business, who had an interest, but no actual role in the delivery.
“Nobody is interested in this any more”
So, the Managing Director of the business was initially on board and supportive of the project. She had come into the role from another part of the business overseas. She liked the idea of “her” business unit as one of the first globally to launch an online store.
Good start. Get the MD on board.
Except, for various reasons, the project then took 6 to 9 months after that conversation to actually start properly. And by that point, her attention was on other projects. The novelty had worn off. And, when we’d finally secured all the resources to kick the project off, she outright told us, it wasn’t interesting any more.
We took one big learning from this.
And that’s that you have to get to know your stakeholders. And if they have short attention spans and high expectations for quick results (as she did), choose when and how to engage them very carefully. It would have been better to have more project momentum before we got her engaged in the project.
Ah, well. At least she didn’t pull the plug on the project.
“You need to be careful this doesn’t upset the retailers”
So, this one came from the National Account Manager who looked after our biggest retailer accounts. To be fair, he had a point. When you launch your own online store and sell the same products as you sell through retailers, you become a direct competitor for them. Even if your online store business is small.
And that can get a bit awkward. Not to say, put your sales with them at risk.
So, we worked with him, on what the conversation would be with the retailer if they asked “why are you competing with us?”. We made sure that pricing was not going to be an issue (we sold at the recommended retail price). Believe us, you don’t want to compete against your own retailers on price.
And we also made sure, that the online store benefit and positioning made it a different proposition from what the retailers could offer.
We prepared an objection handler for the trade teams. It showed our store would grow the overall category by bringing in new customers, without taking away the retailer’s business.
It was a key lesson that your online store has to fit into a wider sales strategy. And that you have to have a clear and distinct role for each channel within that sales strategy. Interestingly, we didn’t get the same challenges from the Sales Director, who was the sponsor of the project. As he put it, anything that reduced our dependence on our few biggest customers as a good thing. So, he was very supportive of the project.
“Our company is not a retailer”
So, once the project started, because we were the first in the business to launch an online store, we suddenly had a lot of regional and global teams taking an interest. Our regional IT team offered to help. They wanted to be involved, so they could build their own e-Commerce systems skills and roll them out to other markets.
Which was helpful. However, when we took the global IT team (to whom the regional team had a reporting line), they couldn’t see the value at all. To them, the business was an FMCG manufacturer. One of them openly said to us “But our company is not a retailer, why would we do this?”
Now, obviously, to even start the project, we had put together a business case and business model that outlined the strategic and commercial benefits of the project.
This included the consumer / shopper benefit, the digital infrastructure including access to data and sales and profit forecasts that showed the project would deliver a positive ROI in 12 months.
Our key lesson was to do the due diligence on the business case early in the process, because it helps you overcome so many barriers to e-Commerce further down the line. In actual fact, our ROI went positive in month 8 after launch.
So, in actual fact, yes, our company wasn’t a retailer. But pretty soon, it was, and doing it successfully.
“I don’t really see the point of doing this”
So, we mentioned earlier that the project team were almost all engaged in project. But we did have one loose cannon who was not totally on board. Surprisingly, this was the digital marketer we’d seconded from the brand team. You’d have thought a “digital” person would have been one of the earliest converts.
The marketing team and this guy had a view that their role was to drive consumers through a branded journey. And that “sales” would take care of themselves after this. They couldn’t see the benefit in us owning our own online “place” (if you know the Marketing 4Ps) and saw the launch of an online store as not that important in the overall scheme of their marketing plan.
It was only when we showed how the whole brand and store ecosystem would work together, that they really started to get on board. And when we showed that driving sales through our own store was more profitable, and could be used to justify future investment into digital channels, then they really got on board. Money definitely talks.
In the end, they were on board and helped us deliver a strong joined up digital customer experience.
“It hasn’t worked in other companies”
This was a disappointing bit of feedback to get, as it came from the global head of digital. She rightly pointed out a few other FMCG businesses had tried to launch online stores.
However, when we looked at the case studies she shared, their business model was different from ours. They were also in markets and categories that had a very different context to our project.
Our response on that one was to acknowledge the lessons from the case studies. We said, where we could, we’d apply them into our project.
Though to be honest, most of those other launches had failed because they’d launched “big”. They’d pumped a load of advertising dollars into support their selling efforts. Then, pulled the plug when they didn’t get a quick pay-off. That wasn’t what we had planned.
We knew that the pay-off time would probably be longer. So, we ran the project on a much lower-cost and lean way. We ran it “small” as a pilot. There was a definite test and learn approach.
We didn’t actually do any advertising until Month 3 when we’d already started to generate sales through word of mouth and links from the brand site. So, the store was always self-funding. We made sure after it launched, that we didn’t need to go back and ask for more money. (other than normal budgeting procedures)
“Shouldn’t you drive your business with other retailers first?”
Another interested party was the Regional E-Commerce Director who hit us with this question.
And it’s a fair question.
Apart from the fact that we were already driving our business with other retailers. And we’d hit a limit of what we could do with them.
It’s a fair question because from an overall e-Commerce planning point of view. If you already sell through online retailers, they’ll have online shoppers and you’ll get a quick bang for your buck there. You don’t have to go find customers. They’re already there on the retailer’s site.
But, as you can read in our online store business model guide, having an online store in addition to selling through online retailers gives you more benefits in online selling.
You have the benefit of direct connection with the online shopper. You have the commercial benefits as you own all parts of the P&L including the selling price and all your selling costs. And of course, you have the added benefit of control over the channel. No middle-men to deal with when it comes to selling, just you and your online shopper.
“I don’t think we should be doing this, we have other priorities”
And then, having overcome all these other barriers to e-Commerce, our local Head of IT decided to hit us with this one. To be fair, he did not have a big team at the time. And they did have other projects to deliver.
But we knew, that he was also worried the workload would be too much, and any technical issues after launch would likely hit his team. So, we had to go back to the business case, and walk him through why we were doing it, and what the overall benefit was.
We then also had to translate that benefit into what it might mean for the IT team. Because there was income and revenue associated with the project, we could argue for more funding and resource for his team to support it.
That, got him very interested. As we already said, money talks.
And by the time the store launched, he was a major champion of the project, because it gave his team much more visibility and status across the business.
“I don’t believe consumers would buy direct from us”
The finishing line was in sight, when we almost stumbled over this hurdle from our Head of Regulatory and Legal. We’d spent a lot of time with her team, because setting up your own online store comes with a lot of responsibilities.
There’s a lot of work to make sure you meet Privacy guidelines for example, because of the amount of data you capture. And that’s not even touching on all the Terms and Conditions that you need to manage transactions, refunds and customer complaints.
And just as we thought we were there, in the final approval meeting, we had to address this challenge. Now of course, we didn’t know for sure that consumers would buy direct from us. Though we had some limited market research that predicted they would.
We had also set the project up as a pilot / low investment project. So, even if we had not sold anything, the business would not have lost much money on the project. (The project budget was about $80k by the way).
But we acknowledged the point. We re-iterated the pilot nature of the project. And, we held back on mentioning this ‘prediction’ when the store broke even eight months later. And when it passed its first million dollars in sales before 12 months were up.
Barriers to e-Commerce – Crossing the finishing line
Probably our biggest lesson through overcoming all these barriers to e-Commerce was to be agile and flexible. This helps you find ways around them. Or to have a thick skin and be resilient. Some of them, you just need to accept the “pain” and barrel through them.
Once the online store development had some momentum, and a clear launch date (essentially our finishing line), it became easier to try and overcome some of these barriers to e-Commerce. That store still exists today incidentally, though in an updated and re-branded format. But all those lessons have helped us navigate through many similar projects since.