Eduardo Medeiros
Chief Digital Officer - LATAM
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Expert Contributor

The Side Effects of Rapid E-Commerce Growth

By Eduardo Medeiros Cardoso | Tue, 11/10/2020 - 09:09

Without a doubt 2020 was a game changer in digital evolution. According to AMVO (Mexican Association of Online Sales), Mexico has had a growth equivalent to 3 years in the participation of ecommerce. But what are the side effects of such strong growth in the online sales channel?

The vast majority of Mexico's retails came at medium/low speed in their digital transformation. Firstly, because ecommerces represented on average a small portion of total sales, around 0.5% to 7% for the most advanced companies and with the objective of achieving a 2-digit share in the next 2 - 5 years. Due to this small participation, many retails were not prepared and had not invested resources to depend 100% on their digital channel.

During the lockdown we saw super traditional retailers innovating quickly, some at a technological level and many with a simple optimization of their human resources (what was previously bureaucratic turned into open paths). They quickly implemented delivery services, BOPIS (buy online pickup in store), Curbside pickup, shipping from the store and integrations with different marketplaces.

With this exponential growth in online sales, companies had the same impact on their operation, putting in check the restrictive internal processes, internal systems capacity, customer service capacity, quality of internal talent, knowledge about their customer and flexibility to adapt in the middle of chaos.

This was a super positive side because it put the CEO's and their Board of Directors to rethink their structures and processes.

The current moment is the most propitious to learn lessons from the operating chaos and redesign its internal processes to continue competing with players already navigated in the digital world.

In my opinion, this exponential growth of electronic commerce, driven by a pandemic, proved once again for large companies the need to have a team with a sense of urgency for the importance of digitization, information, automation, customer-centric, a data structure solid, agile processes, have clear metrics and an area 100% dedicated to a single indicator, the NPS (Net Promoter Score).

The side effect that many still do not see from this exponential growth is the loss of customers in the medium / long term, because as new customers are gained much faster, we lose a customer in the digital world based on the experience of buying and after sales.

Many retails, due to not having a structured operation, increased the volume of customer complaints exponentially, mainly due to the participation of new digital consumers and creating a negative feeling of digital shopping experience.

Some examples of poor after sales execution that quickly lose customers:

  • Not tracking the shipment,
  • Slow and bureaucratic procedures for cancellation and return, Call center with low capacity,
  • Not having a smart chatbot,
  • FAQs poor in content, content and description of products with wrong measurements or color,
  • Do not respond to negative comments on social media, c
  • Communication 100% focused on generating sales and not value,
  • Poor remarketing actions (offering the same product the customer has already purchased),
  • Failing to promise delivery and not being proactive in communicating to the customer that your product will be delayed in delivery.

CEOs and C Levels cannot lose the understanding that this growth was only due to a global event and they should continue to invest in its digital and cultural transformation, but with greater commitment and a new speed of implementation.

A point to note is that when the customer migrates from the physical to the digital channel, he is only 2 seconds away from any other store. If he does not find what he wants, or if his shopping experience was frustrating or cannot be answered in any of his doubts or pains that he has throughout the purchase process, the company will lose him forever. The speed of losing a loyal customer online is infinitely faster than losing it physically and the cost of acquiring a new customer is 5 to 6 times higher than maintaining a recurring customer.

Many retails will unfortunately leave this year with a smaller loyal customer base than those who entered due to flaws in the operation and the delivery of value throughout the purchase process. Something super difficult for a company with a more corporate profile is breaking bureaucratic processes, focusing on the funnel of the buying / post-buying experience and giving autonomy to those who know how to operate.

I suggest that you answer these questions as an exercise to understand your current situation and to learn the best lessons from the growth of digital sales:

  • What were the restricted processes that your company relaxed during the lockdown?
  • What new initiatives were implemented in this period to sell more? (example: Whatsapp sales, social media sales, drive thru model, shipping from the store, outbound sales ...)
  • In which new commercial initiatives, the use of technology was not required, but its human resources were optimized? (Example: use of the call center and the commercial strength of physical stores that had time available to make active sales to their base of frequent customers).
  • How many complaints have you had and in which areas? 
  • And what was the behavior of your client, how many are returning, what is your NPS (net promoter score)?
  • What was the share in sales and operating cost of ecommerce by location vs the same locations as your physical points?

As a final tip, for 2021 to really be the year of consolidating your digital strategy, you should to create a plan to have the basics done right. If you don't have them, don't try to invent the wheel, but rather have a super focus on making processes more flexible and cultural recycling.

Photo by:   Eduardo Medeiros

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by Eduardo Medeiros Cardoso