One of the biggest challenges facing digital brand managers is making strategic ecommerce decisions. When coming up with a digital strategy, how many internal resources should be allocated? Which online retailers should be prioritized? What role does content play? How do you make sense of retailer analytics?
Profitero VP of Strategy & Insights Keith Anderson offers his expert advice on how to build digital strategy that everyone in your organization will support.
Also, be sure to keep an eye out for an upcoming Profitero podcast episode as Mark White joins Keith Anderson to discuss topics ranging from the evolution of the rising product page to the growing globalization of content needs.
I’ve seen a growing consensus among Fortune 500 companies that ecommerce can’t be ignored. Yet even as more money gets poured into online as a channel, major challenges remain to setting priorities and gaining insights into metrics.
Here are my thoughts on the key components that go into forming a successful digital strategy.
#1 Define Success
Before you can even think about winning in the online channel, you need to start by defining success. Is success about ecommerce sales growth, or is it more about maintaining brand equity – ensuring your brand is best represented in the online channel to help influence offline sales?
Whatever your definition of success, it’s also important to consider the growing risk of doing nothing.
What we see in our monthly Amazon FastMovers reports, which rank best sellers in more than 10 categories, is that some of the fastest moving brands and products are emerging brands – and not necessarily the incumbent market leader in the brick-and-mortar channel. These brands have nothing to lose by investing aggressively online: establishing a compelling foothold and starting to displace ‘traditional’ leaders in the physical world.
Always estimate the size of the prize and understand how you compare to established competitors, but be aware that there are emerging brands playing offense aggressively in the online channel.
#2 Define your digital strategy and focus
Once you have a clear picture of success, you need to prioritize, as no brand manufacturer has infinite resources. This means assessing markets, retailers, categories, and brands for their current and future potential in the online channel.
This is a complex process that depends on your vertical, but for most CPG companies with shelf-stable products, we believe Amazon is one non-negotiable priority. After all, its share of the total online market in the US estimated to be somewhere between a third and 40%, (which varies by category).
Amazon is also increasingly focusing in the CPG space both in terms of its growing portfolio of products such as Pantry and AmazonFresh, as well as new devices and interfaces oriented to CPG products like Dash and Echo.
Planet Retail predicts that Amazon will see the highest growth between now and 2020 against all major retailers, so without question the e-retailer should be core to your online strategy.
#3 Build a world-class team
In the early stages of maturity, many companies assign responsibility for ecommerce to leaders with many other responsibilities. But it’s difficult to plan and grow without dedicated staff who are measured and motivated to focus on channel success.
As companies begin to prioritize ecommerce and dedicate budgets to hiring, we often see two different profiles of candidates considered to lead the initiative:
- An experienced leader with deep industry knowledge. This is often someone who has come up through the ranks in disciplines such as shopper marketing – but who now needs to learn ecommerce on the job
- An ecommerce/digital/social native who doesn’t have industry knowledge, but has a deep understanding of technology and ecommerce
Both models can be successful. But considering how essential widespread internal alignment and support is to executing on a solid ecommerce plan, domain experience combined with a passion for innovation, improving the customer experience, and retailer partnership is a formula for building credibility both inside and outside of the organization.
More brands are also hiring from Amazon and other key online retailers to help them navigate exponential growth with perspective from the other side of the table.
#4 Equip your team with the right toolkit
Once you have someone who is responsible for the overall direction of your ecommerce strategy (and ideally designated people on individual account teams to support this strategy), you’ll soon realize that there is an abundance of ecommerce solution providers in the marketplace to support your performance.
While keeping up with and evaluating the growing field of technology vendors is a monumental challenge, one priority should be to identify an ecommerce performance analytics partner. Most companies’ leaders expect standardized reporting on performance – after all, you can’t manage what you don’t measure.
Analytics from Profitero focus on critical performance drivers in areas like pricing and promotion, product and assortment attributes, product content (images, titles, descriptions, ratings & reviews), and search and category ranking.
Profitero can also help you estimate the size and growth of your category on Amazon, your brand’s share of the category, as well as your mix of first party versus third party sales on Amazon.
After all, true performance measurement must focus on outcomes, not just inputs.
#5 Continuously measure and optimize your digital strategy
Defining KPIs and building a scorecard is critical to how the ecommerce channel is viewed broadly within an organization and how the leaders that own its success ultimately execute.
When Profitero begins working with a new customer, we conduct an initial assessment of their ecommerce performance to understand their starting point versus leading practices and specific competitors.
From there, the focus shifts to setting targets and continuous improvement.
Keith Anderson leads the continuous innovation and development of Profitero’s online insights solution for retailers and brands, helping global companies gain a deeper understanding of their online presence to optimize both online and in-store sales. Be sure to check out Keith’s latest industry podcasts.