It’s not about selling better stuff - it’s about selling stuff better!
There is a new star on podcast-heaven: The WimLex-Show, presented by Willem Blom, Founder of Expand Online and Director at Dept., and Alexander Graf, CEO and Founder of Spryker Systems. In this very first episode of the new E-Commerce podcast, Willem and Alexander give a deepdive into the different stages of the E-Commerce evolution.
The beginning of E-Commerce success stories
2008 was the year when the E-Commerce node was bursting. Although E-commerce already existed for several decades, the classic online trade as we know and use it today only had its first boom about ten years ago: The most successful e-commerce projects began in 2008 and the e-commerce landscape was entering a period of fast development. A lot of small pure-players that had started out a few years previously began growing rapidly. They stood in sharp contrast to bricks-and-mortar stores, who were hardly present online.
The turning point of digital commerce
Lots companies had reached the conclusion that their own transformation projects had been too slow. Even if everyone from board level downwards was convinced of the necessity of digital transformation, there simply was no way of transforming a legacy company. What became ever clearer was that the only option was to bet on legacy-free ventures. That´s why since 2008, we’ve seen pure-play concepts venturing onto the high street and stationary retailers going online.
The new players on the digital field
What we’ve learned is that successful online challengers – like Amazon, Zalando and all the other prosperous pure players keep IT in house. In fact, better IT capabilities are their USPs, because it’s not about selling better shirts anymore: it’s about selling better! And this “selling better” doesn’t have anything to do with legacy strengths such as the ability to open new brick-and-mortar locations. It’s about better personalisation, better CRM, better online product data. In other words: it’s about creating a better customer experience - that’s where you need to do better than the market.
What to do for the old players?
As it currently stands, legacy companies are not in a position of strength. Many of them have been scrimping on digital innovation because they thought they could keep pursuing their linear strategies: opening new stores, stocking new brands, etc. And while they're doing it, they're wondering: “How can we jump on the train fast?“
“ I wish I could tell them: “Don’t worry, everything is going to be fine. Here’s some new software! Now, just put football tables in all your offices and Club Mate in the fridges…” But that would be lying.” Alexander Graf
People aren’t adapted to dealing with change. That is why big companies are understanding themselves as organisations for minimising and managing risks. And here is the big difference. Successful digital companies say: “We’re not able to manage risk, but we can manage opportunities.” That is a fundamentally different approach.
The big goalscorer in E-Commerce
And where all the small and big traders fight for their position, one dominates the field - with not quite fair conditions. Yes, we are talking about Amazon.
Are you aware of “The Prisoner’s Dilemma”? In game theory, this means: two prisoners are made an offer by the prosecutor. If one betrays the other, he will be set free. This creates a lose-lose environment for the prisoners. The Amazon Dilemma applies to vendors which derive large proportions of their revenue from Amazon: they can’t get out. So Amazon can punish them – demanding ever higher advertising spends or lower wholesale prices. Yet they have no recourse: you can’t set up a cartel with other vendors; you can’t change Amazon’s behaviour. The only thing to do is to be the cleverest of the prisoners!
“You have to lock the customer in. (...) In Germany, somewhere between 50% and 70% of all customer journeys now start on Amazon. For manufacturers, that means: if your product or brand isn’t showing up on Amazon, it won’t get bought.“
You want to get even deeper to the bottom of this? In the first podcast episode of the WimLex show, Willem and Alex dive into the stages of E-commerce development in more detail and give a spoiler on the topics of the upcoming episodes.
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