Business Process

Category Archives

Efficiency in E-Commerce & the story of my feet

Due to the time-consuming nature of translating, this item is only available in English.

 
Before anybody asks: EU 49, UK 14.5. This blog is as much about my personal frustration (of crappy webshops, not being able to find a decent variety of shoes, and more), as it is about recent developments in our E-Commerce world.

The past few years, parcel services have been all over the news in the Netherlands: We had news about the volume of delivery traffic causing traffic jams in our cities, PostNL (our oldest parcel service) has been getting rid of as much payroll as possible and started to hire independent parcel runners, and recently there’s been a lot of criticism on how little these “entrepeneurs” get paid.

Alongside at least monthly news about a rapidly changing parcel world, there has been a steady flow of smaller news outlets pointing at another huge disadvantage of our growing E-Commerce market: Less large deliveries to stores means more small deliveries. Result: Our urban traffic jams are growing year-over-year, and our environment is suffering.

You can imagine my surprise when I heard this news in the morning. In short: Kitty Koelemeijer (of Nyenrode Business University) states that crossborder parcel services are too expensive, and E-Commerce could be stimulated by causing more transparency in the sector in order to apply market pressure to the rates – on a total of 370 billion euro per year, the consumer could save up to 12 billion per year in parcel costs.

I bought new shoes this week, and men who share my shoe size will probably know this is not an easy thing to do. Yes, we have a few shops in Rotterdam that go up to 50/51, yet I never feel like going there: Prices are fairly steep and there’s a maximum of two brands and four pairs to choose from. A total waste of my time. No, I buy my shoes online, where it’s quick and simple. Two or three pairs at once, and I know exáctly where to go. The choice in brands is still disappointing – heck, I even tried personally stalking Guillaume Philibert in order to obtain a pair of his nice Filling Pieces in a size made for real men – but hey, I manage to put something on my feet.

So I started thinking: What’s important to me when I buy these shoes? Would this measly 3 percent discount make me buy quicker or add an extra pair? Don’t think so. Would it have for other fairly recent orders? Not at all. So why do I buy where I buy?

Because of this:

  • Availability. Shoes in my size are hard to find, some other stuff I order is only available through a few specific webshops.
  • Speed. I want my stuff and I prefer to have it yesterday. Now is also fine, try not to make it tomorrow.
  • Accuracy. I want to order what I need. My hate for having to use returns processes exceeds my hate for the sum of my hate for highway gas station toilets, biking to work in the rain, empty phone batteries and unspecified syntax error messages.
  • Ease. I don’t have much time. Don’t make me login: Take my zipcode + house no. and my e-mail, make me pay, and let’s get it over with.
  • Trust. If I order, I want to be sure I get my stuff on time. Oh, and I prefer being sure I actually get my stuff, too.
  • Price. I want to buy for cheap, but only after the requirements above are met.

You’ll probably be saying “these are YOUR preferences, YOU don’t represent the whole European market!” by now.

However, I feel I’m quite close to an average customer. The two companies I’ve had the best experience with in the past year were CoolBlue and Bax Music – both are showing turnover growth that’s near insane, and both are winners in very difficult markets.

Statistics

Let’s look up some E-Commerce numbers. I recently found an article about the average turnover per order in the EU somewhere, and although I cannot reproduce it now, I’ve found some stats from the US: The average E-Commerce order value there is around 80 US dollars, and it has been around this mark since 2012.

Finnish PostNord has had their marketing department make up a wonderful 44-page analysis of the European E-Commerce market in 2014, which gives us even more valuable information: Clothing and footwear were the number 1 product, keeping books (2) and home electronics (3) on a safe distance. And although clothes and footwear have a large advantage in the fact that they barely ever break in the mail, they nearly always have to fit.

One of the bigger players in E-Commerce in the Netherlands is Zalando. The managing director of Zalando, Rubin Ritter, has once told Die Welt that the amount of returns of Zalando is around the 50% mark. FIFTY percent. Zalando is quite transparent – their annual report is easily found through Google, and it shows their fulfilment cost ratio is 25.9%. How much of their revenue is being spent on returns? 10%?

Let’s not jump to conclusions right now – I’m an ERP Specialist, not an E-Commerce consultant, so you won’t hear me shouting that reducing returns is the holy grail of E-Commerce. However, the facts I found show that a lot of resources are going to waste to facilitate returns. From my personal experience, I’ve learned that I keep coming back to webshops that manage to get me exactly what I want, where and when I want it, not to the webshops who have the best returns strategy.

My two cents: The technology to get to know your customer already exists. You can have your customer return, instead of your product.