The great increase in the e-commerce industry over the recent years is apparent and undeniable. With the advancement in technology, the road is paved for retailers to occupy this new plane and any business that wants to be successful these days is pretty much forced to take this road to keep up with the competition.
There are over 24 million online stores functioning today according to the Retailtouchpoints.com. However, only about 650,000 of them (which is only about 2.6%) are actually successfully getting revenue from their sites!For a lot of online stores, the biggest roadblock seems to lie at the transition from small-scale businesses to enterprise e-commerce, once the sales start to really grow. In general, enterprise e-commerce is essentially just a larger version of a normal online store. However, running a business at an enterprise level is a whole new adventure! There are multiple factors that come into play once a business grows to this kind of scale. This makes the transition a real challenge!
1.Scaling and Software Upgrades
Between multiple products, variable costs and product variations, enterprise-level e-commerce vendors can have thousands of SKU’s that need to be managed and updated regularly. When getting to that level in sales and product variety, e-commerce companies often have trouble scaling their e-commerce platforms. On top of that, if a company focuses equally on B2B and B2C sales, it might need to consider incorporating different methods of scaling to be able to keep both markets at a high point in sales. A significant number of businesses struggle to pass a certain point in their growth, due to their website’s inability to keep up with it.
Another big concern that companies at an enterprise-level have to deal with is data storage, management, and consistency; and the related software upgrades. For companies with actual physical stores, it is even more essential that all data related to the products, orders, and customers is stored correctly and can be used seamlessly across channels.
Pricing, availability, descriptions, and features must be uniform across all systems. Having consistent content across multiple channels is a big challenge though! Most companies like to rely on their ERPs here, but those are often very outdated and don’t support modern requirements.Enterprise-level companies grow in multiple ways. Externally, they increase sales and broaden product variety. On the inside, they grow in the number of employees and team sizes. It is very important to have corporate level resources available in order to support the expanding structure.
The company’s core technology should be one that is designed specifically for enterprise level environments (Java, .net). In that regard, it is critical to also have the teams that can design and build such enterprise level solutions for your company.
At this point a company will also need to make a decision on whether to go with an on-premise solution or cloud. With an established and well-functioning on-premise platform there might be no immediate urgency to switch to alternatives. However, more and more enterprises these days opt to go the Cloud or SaaS way, or create a custom combination of all three.
The perspectives and costs are always the main concern of an expanding business, and cloud-based systems provide the most flexibility and scalability when it comes to adjusting to the continuous growth, as well as helping save budget over time. Check out our blog article on the 5 reasons to switch your e-commerce to the cloud for details.
E-commerce space is growing rapidly for retail and manufacturing companies, and the increasing competition in e-commerce is a very real challenge for large-scale enterprises. E-commerce has also made it possible for the new players to come into the market and compete with the established retail giants.
With the rise of new technologies bringing forward new marketing methods, the online competition is consistently growing and going even stronger than offline. The bids in Google AdWords are increasing every day; as is the cost per order.
According to Word Stream’s report, the CPC (cost per click) in AdWords currently ranges from $1 to over $50 per click, with the average cost lingering around $27. The average conversion rate is 1%. This is equal to $2700 cost per action (or per order in e-commerce’s case). Giant retailers can spend up to $50 million per year on paid search in AdWords. Not that many e-commerce stores can afford these kind of advertising costs.This steers enterprises towards looking for newer, cheaper channels for promotion, such as social network ads, RTB ads etc.
Service competition is also a big thing and it cannot be overlooked! At enterprise-level companies, the service-related processes tend to get slower the larger the companies get, which makes it more challenging to compete with the new, up-and-coming players on the market.
It becomes even more complicated once international sales and shipping come into play. Between dealing with manufacturers and suppliers, replacing lost or damaged parcels and handling back orders, it’s not easy to keep everything organized. Yet it’s essential, in order to stay competitive in the market.
3.Internal and External Integration – ERPs and Cross-platform
Internal integration – ERPs
This is probably the biggest challenge for most corporations. Larger companies that have been around for a while often use a lot of different legacy and new systems that need to be integrated with each other – from ERPs to SalesForce type of tools. They already have an established eco-system, to which at some point it starts being extremely challenging to just try and add a separate unit. Just like trying to add an arm to a statue, it would be odd and out of place. Plus, lots of backend systems are not built to handle the requirements of the modern e-commerce sites (performance, 24/7 availability, instant pricing etc). So, some of the processes need to be simplified or completely rethought.
This is why more and more corporations are taking the decision to switch completely to more modern digital eco-systems, where processes work more like Lego, and the overall system can be built and shaped however needed, yet the pieces plug into each other seamlessly and form a solid structure. The solutions with micro-services and module-based architecture allow for this more sophisticated way of running the business processes.
Another topic here is integration with external partners. As an enterprise-level vendor you also often need to accommodate a number of selling and buying partners within the same system and offer multi-vendor catalogs.
In addition, your system might need to integrate external ERPs.
External integration – Cross-platform and catering to the new generation of users
Due to the rapidly rising demand for mobile integration, the enterprise-level players in e-commerce are forced to pay more attention to their mobile optimization and app customization.
The problem with enterprise-level businesses is that many e-commerce enterprises have been slow to adapt and adopt the technologies that can help them transition from online retailers to cross-device retailers with cross-platform sales. Customers on the other hand, have already adopted the habit of shopping via smartphones and are expecting a mobile-first experience from e-Commerce businesses.Becoming an omnichannel vendor is key. In order to succeed in this journey as an e-Commerce enterprise, it is important to make sure you provide the best experience for the buyers across multiple devices and multiple platforms.
With Millennials now becoming the largest generation, it is essential for the enterprise retailers to adapt to the shopping behaviors of these always-connected new buyers, with shorter attention spans and an ability to broadcast their satisfaction (or dissatisfaction) across social networks.
Here are a few stats to illustrate the importance of having a well-performing mobile shopping technology:
- According to Google’s Mobile Playbook, 57% of consumers will not recommend a business without a well-designed mobile experience;
- Econsultancy states that 88% of online consumers are less likely to return to a website after having a bad experience;
- A Smart Insights’ article by Dave Chaffey’s claims 62% of businesses that designed a website specifically for mobile have experienced an increase in sales.
4. Localization and Shipping
The connection to the local environment is extremely important for enterprise e-commerce, as it persuades the local buyers to trust the seller enough to complete the purchase. Adjusting the website to meet local requirements it is functioning in, is one of the key elements to a successful integration into new markets (i.e. currency).
In addition to adjusting to local currencies and payment methods, a website’s storefront needs to be translated into local language, which often means introducing multiple storefronts for the same catalog. This is something a company needs to anticipate and be sure their e-commerce solution can accommodate.
Another big element of expanding the business is shipping. If handled incompetently, order shipping and delivery can become a logistical nightmare for enterprise-level businesses. Just like with the localization challenges mentioned above, shipping and delivery methods need to be adjusted to a specific area, using the available means.
Organizing the delivery infrastructure across several countries and potentially continents is a serious factor for any company. Large enterprises often have a tendency to over-estimate their shipping capabilities and set overly optimistic ETA’s, which results in unhappy customers and reduced sales.
Recruiting the local resources to help evaluate shipping and delivery possibilities, as well as time and costs, in the area can ensure a smooth supply chain and efficient deliveries within optimal time frames.
These are the most common hurdles a growing business has to address when transitioning to or operating at an enterprise level. It’s important to always know what to expect and be prepared as your business continues its journey towards the new heights. The bright side is that with proper planning and a strong marketing and operational strategy, all of these challenges can be overcome!
This article was written by Virto Commerce, who is an eCommerce technology company that provides services and expertise for hundreds of merchants and solution companies.