Against a backdrop of bleak global consumption, e-commerce is continuing to perform very well. Furthermore, recent forecasts show excellent prospects on most non-food markets with average annual growth of 14% predicted for 2017 (compared to -1% for non-e-commerce).
For traditional distributors, e-commerce is an area with excellent potential growth, with omnichannel customers consuming around 50% more than single-channel ones.
However, omnichannel success requires distributors to conduct a comprehensive review of their sales and operations model, to develop their revenue and market share, while controlling distribution costs and preserving profitability. This transformation should not be limited to merely integrating store and e-commerce activities, at the risk of missing out on some of the opportunities the internet has to offer.
For a traditional distributor, the major challenges of implementing omnichannel include:
- Developing a mix strategy that can effectively supplement the store offer (e.g. long tail on key product categories to strengthen their positioning and sustain click-and-collect);
- Establishing a consistent pricing strategy between channels by integrating the very different online and offline management constraints;
- Formulating an attractive and differentiating global customer promise, while controlling distribution costs (e.g. shipping fee recharge policy or contract clauses offering unlimited free express deliveries);
- Integrating technology in stores for the use of customers and sales advisors;
- Making the necessary organizational and procedural changes to ensure the success of this transformation across all business lines (Marketing, Merchandising, Procurement, Supply, etc.);
- Reviewing logistics tools to improve operational flexibility (e.g. continuous preparation of online orders vs operation with a daily batch, duplication of stock to reduce time frames and transport costs, etc.);
- Implementing new methods of governance and prioritizing Profit and Loss (P&L) across all channels for each geographical segment to maximize offer synergies and resources between store and e-commerce activities.
How can Argon Consulting help you?
Argon Consulting assists distributors in their omnichannel transformation, from defining through to implementing the strategy, in the following areas: central organization and new functions, logistics applications, store operations, Information Technology development, etc.).
Changing sales models (offer, prices, services offered and related costs, etc.) have a significant impact on operational/economic models (stock levels, logistics resources and costs, store/home transport costs, store operations, etc.), so it is necessary to carefully model additional revenue and related cost trends to calculate which scenario is the best to implement.
We provide distributors with a unique approach that focuses on sales and operations, to help you make the best choices or trade-offs between offer/customer service and process/operating costs and related investments.