Building a European eCommerce Heavyweight Digital Transformation for European Retailers
The Retail world is changing very fast. Amazon, Alibaba are the big players who will dominate in the near future some eCommerce segments. ECommerce is gaining more market share across Europe over the traditional sales channel. Retail companies with brick and mortar store model are struggling with their business model. Their adoption of eCommerce is bound to their historic legacy and not technology and user experience focused.
The European market is not a homogeneous retail market like the US or China is. Across all segments the market is very heterogeneous. This heterogeneity prevents that Europe will create a single strong eCommerce player which could be dominant player against Alibaba or Amazon. Since the heterogeneity is a fact which can’t be changed, to create a European eCommerce champion a different approach is needed. Otherwise Amazon and Alibaba will become a serious threat to the diversity of the European retail market, not only for the eCommerce segment.
Through the heterogeneity there will be no single company which can dominate across most retail segments. The local niche products are part of our life and make up our cultural identity. Global unification of products will damage our cultural identity and will split our society into the poor mass, which can’t afford regional products and those who are interested in local products and can spend the money on the premium. Beside this we will lose the war about technology to the US and China.
From a business perspective the window to establish a European alternative to Amazon and Alibaba will close quite fast. To establish such alternative the required investment budget is bigger than this of a single retailer. A European alternative to Amazon and Alibaba can only build as a platform which defines the user interaction point and act as end to end process Integrator from producer to end customer.
Below we describe the key elements of such a platform and what does it mean for the partners participating in such a platform.
User Experience view
To the end customer such a platform must be able to satisfy 60% of the retail needs of a customer. This means that the product mix depth must suit the different customer groups, deliver search results which map to the user preferences without overwhelming them with variants, identical offers from different suppliers and products which are not considered by the customer group. But the user experience is not only defined by the search experience. The platform has to set the standard for accessing information and to build the awareness for offerings.
The current approach of comparison portals to offer direct buying capabilities are below the approach described above. A portal must offer the brand more distinction than only the price and has to offer brands and producers the ability to promote their offerings. A pure comparison approach will limit how customers are informed about new offerings. The platform must fulfil the aspects from retails marketing about awareness and information. Any brand can add additional information, when the customer is getting into the brand world.
Since this experience is not only focused to our current app and website-based approach. The platform has to define through which technology, the information is accessed. Digital Assistants, Smart Home Appliances or cooking- and styling guides can be the interfaces to interact with the information of the product catalogue.
This platform will free the retailer to attract customers to his site. The retailer must care about the competition on the price, quality or on the customer service domain. Here he can strengthen his brand profile within his target customer group. The retailer will maintain information into a global product catalogue maintained by the platform, but will be the master for CPQ (configure price quote), recommendations and user flow within his offerings. Like Amazon the basket and payment processing must be owned by the platform to allow an uninterrupted user experience. User information is shared across the participants of the basket and added to KI knowledge provided to all participants.
From the user experience perspective retailers can focus on their primary domain to present the offerings in a competitive way to the customers. The platform must provide an unrivaled user experience which will attract a high percentage of users. Through the cultural heterogeneity, the user experience must match the cultural context. The effort needed here to reach the pole position is economically only acceptable when a large portion of retail segments provided per cultural market.
The platform will free the single retailer from a permanent technology management. The platform will provide the technology offering. The adoption of these offerings in the business processes and offerings tailoring is up to the imagination of the retailer. The retailer can focus his Unique Selling Point stricter to his brand potential.
The retailer has to transform his strategy from brick and mortar first to an eCommerce first strategy. This strategy change will spark a transformation of his organization and business processes. But it will help him to keep his market share. Brick and mortar should be an essential part of an eCommerce first strategy, but they must be connected. Such a strategy change can’t be done in a single fiscal year. There is a roadmap needed how the participation in the platform will transform the retailer.
The platform can help here as a consultant, since all participants will face similar challenges. Participating on the platform without the transfor