Experts Answer Common Questions on How to Win Online Through Revenue Growth

September 09, 2021

eCommerce

In part 1 of this series, expert Vincent Duong explained the four key building blocks for winning eCommerce through revenue growth. In part 2 Vincent, along with fellow expert Hubert Paul, dive deeper into what makes a successful eCommerce strategy by answering three common questions. 

With online sales hitting record-numbers in 2020, implementing a winning eCommerce strategy has never been more important. Yet, even the most digitally proficient of businesses can find themselves falling into common pitfalls.

In this article we address three typical issues brands often struggle with when selling online.

1. How can businesses successfully balance offline and online channels for profit?

We often see both brands and retailers throwing everything they can into their eCommerce channel thinking it as an “unlimited shelf” and providing the full inventory to shoppers. Such a strategy would leave a business vulnerable to excessive price comparison, dragging it into a price war. In addition (especially for retailers), you create no incentive for shoppers to go the store where you can more easily drive up the total basket.

The key to balancing online and offline is understanding what consumers expect from each, the occasions and shopping missions they use for different channels, and what you are looking to accomplish within each channel. This will allow you to understand what you should “put on shelf” offline and online.

You can then see how to differentiate your products and prices so there is less direct comparison, and highlight which can be bought online and which is worth going to the store for. It will also enable you to build a more cohesive omnichannel strategy, by making the offline and online channels work together rather than compete for a transactional sale.

Case Study: Quip

  • The digitally-native subscription toothbrush company has partnered with Target to sell some of its assortment offline
  • They have different, more limited assortment in-store at Target to help reach a wider audience through discovery and trial
  • They have a larger breadth and depth of products (more categories and options) online
  • With a strong online foundation Quip also utilizes different pricing models, such as products bundles and subscriptions

2. When should businesses consider selling products directly to consumers through their own website, vs. solely selling through online retail (e.g. Amazon and Etsy)?

There are typically three moments when having your own website can be beneficial. The first is when promoting new products or features, the second is to control pricing, and the third is to help build loyalty.

Ecommerce channels, like Amazon and Etsy, are excellent resources to help brands reach mass appeal. However, brands cannot control their messaging, pricing, or drive loyalty through such sites.

Yet, while direct-to-consumer (DTC) channels give businesses more control, selling through your own website comes with higher costs – not just financially, but also through more resource and dedication required. You need to proactively drive consumers to your store, and make sure the user experience matches how the consumer shops.

Selling through online retail, therefore, is generally more beneficial for brands in two cases:

  1. When they do not have a strong eCommerce presence and can leverage the larger traffic
  2. Or when the category they play in is typically associated with part of a basket filling, or impulse shopping experience, instead of a single-purchase or planned mission

Case Study: Nike

  • Nike sell through a whole host of eCommerce partners, as well as through their own online store
  • They have successfully organized their assortment to meet their consumers’ missions on all of these different channels
  • They have a larger breadth and depth of products (more categories and options) online
  • A way that they drive traffic through their own website is by selling their exclusive, one-of-a-kind designs there, and not through any other channel

3. What can we do creatively online from a revenue management standpoint?

The beauty of online is that you have room to play and try out new things such as developing different price models that couldn’t be possible online.

For example, some commodity brands – like toilet paper, or dog food companies – have set up subscription services where customers automatically receive products. This both improves user experience, and continuously drives repeat purchase, as well as loyalty.

Some apparel brands have also come up with innovative ways to deal with returns. One by-product of consumers shopping for apparel online is that they now tend to buy a variety of different times or sizes and then return those that don’t fit.

Some companies, therefore, have strategically capitalized on this by giving options of either free in-store return or more value through in-store purchasing credit (with a cap). In this way, they used the online habit to help drive consumers back in store and explore other categories that may have seemed too expensive at first.

Case Study: Hewlett Packard (HP)

  • The technology company has come up with an innovative subscription model to drive continuous purchases for their printing services
  • Consumers can subscribe from 15 to 700 pages a month, ensuring both an automatic replenishment of ink cartridges when they’re running low, as well as feeling that they’re paying the appropriate amount for their usage each month
  • Meanwhile, this process allows HP to retain loyalty and maintain margins

Key Takeaways

The four key building blocks we disclosed in part 1 are crucial to creating an optimal eCommerce strategy. Knowing what the consumer journey looks like for your brand, on each of your different channels, and the role of your assortment in those channels, will enable you to best utilize both your offline and online capabilities.

You can find out more about how you can implement the optimal eCommerce strategy by watching our webinar:
The Digital Divide: How Winning Online is the Key to Future FMCG Revenue Growth

Click here to tune into our 2021 Consumer & Retail Webinar Series to discover more topline eCommerce strategies


Read more from this series:

Part 1: Four Building Blocks for Winning eCommerce Through Revenue Growth

Get in touch with the Authors
Vincent Duong
Hubert Paul