10 methods to develop digital commerce

1.3.2016 -

As the Finnish retail sector navigates through choppy waters towards digitalisation and international trade, I’ve observed many good and bad practices during the course of my work. Have you identified any in your business?

The retail sector has encountered a few fundamental and undeniable changes. First, we consumers have changed our purchasing behaviour. Although on average just 5 – 10% of sales come from online channels, these channels already influence up to 50% of transactions. High-quality online and self-service options are no longer just ‘nice to have’, but have become ‘show stoppers’ for consumers.

At the same time, international players have made their products more accessible to Finnish consumers. Two-day delivery and a vast selection of goods at reasonable prices can also entice loyal supporters in the north.

These two changes virtually happened before our very eyes – gradually, but in plain sight. So how has the Finnish retail industry reacted? Has it been even mildly proactive? In fact, a lot is smouldering invisibly below the surface and visibly on many fronts. Along the way various methods, philosophies and best practices have caught my attention. The following include some of the most important:

1. Digital and brick-and-mortar commerce is seen as a single entity and mutually supportive operations, not separate silos.

2. International competition has been treated as it should be: it exists and we must learn to live with it and do better. Typical competitive situation. Let’s move on.

3. Product selections have grown considerably. Not necessarily by expanding existing inventories, but by increasing drop shipping or making use of marketplaces.

4. Pricing has been simplified. It’s no longer necessary to calculate complex pricing rules in order to arrive at the best individual prices for all customers. Now a standard price plus campaign offer is sufficient. Automation calculates the best (profitable) price after factoring in current competitive situation.

5. The service experience has been justifiably placed in the spotlight. Concepts and operational models are planned and implemented through the eyes of the customer, not on the basis of operations or systems. We are now constructing transaction paths and genuinely trying to understand the customer.

6. The culture of experimentation is at its peak. New business models are being implemented, including new online brands, marketplaces – even the online food trade’s “dark stores”.

7. Companies’ leadership structures have moved to the next level. Separate organisations for online and store outlets merged and gave top priority to customer experience.

8. Information-based leadership now focuses on generating additional sales: all eyes & minds forward. The ‘next best action’ principle drives operations.

9. It’s understood that different operations require slow, semi-agile or agile approach for IT systems development. Now we understand the last [agile approach] tops the list and helps to enhance customer experience most rapidly.

10. Partnerships have evolved into genuine cooperation. Goals are common and both successes and failures are shared.

All of these methods help us respond to the challenges of digitalisation and internationalising trade. Very few players have implemented and put everything in everyday use. There are mainly examples of individual good practices I have encountered through my work.

For us at Solteq, these themes act as directions signs as we direct our actions and solutions towards current and future commercial needs. You should also take advantage of them. What would they mean from the perspective of your business operations?

Juha Luomala

Juha Luomala

I am a digital commerce expert and Solteq’s ‘Mr. Portfolio’. I work closely with company management teams and key personnel, and participate in planning new projects and operational models. I listen, challenge, consult and coach. With this understanding, I also lead Solteq into new solution areas. It’s a pleasure to work in a field where there’s never a dull moment.

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