How to Successfully Digitalize Retail

Anders Abel, Net Group’s Head of Digital Business

E-commerce is developing globally at a fast pace and has become the holy grail of retail business in recent years. U.S. shopping centers are closing doors, while retail spaces in Estonia are only expanding.

In Estonia, the share of e-commerce in the retail business is 3% — we are well behind the international average of 10%. According to statistics portal Statista, the global e-commerce sales volume was 2.3 trillion dollars in 2017 and by 2021, it is expected to grow to 4.8 trillion dollars. Seems like the train is leaving the station, but Estonian retailers are being left behind. How do we keep up?

Digitalizing retail enables us to enter the new geographic markets with optimal investment while being more accessible to the clients. In addition, it allows testing of new business models that are complex and time- or resource-consuming when tested through traditional channels.

Working with different businesses, I have come to the conclusion that creating a website where customers simply add products to the cart and pay with a credit card or PayPal account is not enough to achieve success. More needs to be done to keep a sustainable online business. 

Following, I will share effective digitalizing tactics suitable for both new and existing retail businesses:


1. Everything Starts with a Strategy

The first step is to think strategically. Today’s successful e-commerce companies have a strategy to develop their online business. Try to answer the following questions:

  • What do I want to achieve with business digitalization?
  • Who are my clients and target markets?
  • What is my position in the market compared to my competitors?
  • How will I use the data deriving from the e-channel?
  • What is my value proposition to the client?

When selling in physical channels and e-channels, it is important to integrate the e-commerce strategy with the company’s overall goals. The development of digital strategy often opens new business directions and models that you should not fear. While creating a strategy, carefully choose cooperation partners because they will ensure the successful operation of your business. Effective logistics, payments, marketing and a user-friendly online channel are key components of implementing a strategy.


2. Consider Digitalization an Ongoing Investment

It is important to understand that digitalizing business equals an equivalent (often even financially smaller) investment to opening a new physical store or agency. Only this channel will be open 24 hours a day and be accessible for all Internet users. Therefore, plan sufficient resources to carry out the project. Use ROI calculations and market research to properly evaluate digital projects and their costs.

Be sure to allocate human resource to digitalization projects. In particular, it is important when developing digital business to designate an “owner” of the company, one who has been given management duties, financial resources and decision-making competence for implementing projects.

Strategy is by nature a living phenomenon. The e-commerce strategy should be constantly renewed and updated and the project portfolio should be reviewed based on that. You never know when one of your local or global competitors will surprise you with a renewal.


3. Measure Twice and Cut Once

Starting the development of an e-channel without thorough preparation means the project will likely fail. I have personally seen several situations where adequate preparation was not employed, and as a result, a point is reached where it is not possible to move on any further. This often means that the project needs to be re-started or paused due to the lack of return on investment.

To avoid this, it is important to think about the purchase and delivery processes from a customer’s point of view, including the e-store experience. For the customer experience to be positive, you will need the cooperation of different sales channels, product management and integration with the cooperation partners (logistics companies, external warehouses, accounting, etc).

The same applies to choosing partners. To achieve success, it is often crucial that partners understand all the aspects of e-commerce, and can keep up with the constant changes in the industry. Be it the deployment of a digital sales channel, the streamline of product management and back up processes or eventually predicting and measuring channel performance.


4. Avoid Taking on Too Much at Once

Starting a digital business should be done in stages and results should be constantly monitored. This ensures the proper use of the investment and allows you to adjust accordingly without major financial and time loss.

Receiving constant feedback from the users or clients and monitoring business using intelligence tools allows for making corrections at a right time. Use business intelligence tools wisely (ex. setting up programs like Google Analytics correctly). This will ensure important e-business decisions are made based on accurate information.


5. Keep Customer Perception in Mind

Given the ever-increasing amount of information that web users consume on daily basis, it is very important to focus on keeping customers’ attention. Beauty is in the eye of the beholder — consumer-oriented environments must be tailored to suit the clients’ needs.

Hereby, I will make a few specific and technical recommendations for making existing sales channels more effective.

  1. Think carefully through the journey of a customer in an e-store. Could a conversion become stuck because of a technicality?
  2. It is a good idea to use interactive product media. Use quality pictures and videos of the products and allow the customer to view the products from different angles. This increases the probability of a purchase.
  3. Use push notifications where it is possible to redirect controlled notifications to customers to bring them back to your sales channel. According to the statistics, nearly 72% of millennials react positively to such notifications. Remember to carefully consider how often you use push notifications—overwhelming a customer can cause a negative reaction.

To finish off my thoughts, here is a quote on digital retail: “Turnover emerges in a customer-oriented e-shop, but the profit is driven by the digitalization and automation of complete processes.”


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