Why read this? : There’s many benefits to selling online, but not everyone agrees with them. Learn from our example of the main barriers to e-Commerce we ran into setting up our first online store. We show how to deal with the different challenging questions and views you run into. Read this to learn how to get over the barriers to e-Commerce.
We’re big believers that in most cases, doing something is better than doing nothing. That doesn’t mean you should do everything. You still have to pick the right things to do. But, we meet a lot of people in business who spend most of their time saying no.
Don’t do that. That’ll never work. We tried that before, and it failed.
You see it a lot with marketing innovation. As per our how to be a more creative company article, you find lots of critics in business who want to “protect” the interests of the business. But they get in the way of creators who want to drive new ideas.
This was top of mind for us because of a new e-Commerce project we’re working on. In this project, we’re applying lessons from the first big e-Commerce project we worked on many years ago.
Because the first time you do something, is when you learn the most. You always start from a base of little or no knowledge. And you learn as much from making mistakes, as you do by getting things right.
Setting up an online store for the first time
Just to give some context, that first e-Commerce project was to launch an online store for a big international FMCG business, 5+ years ago.
Even now, there’s not many FMCG businesses who have their own online store.
If you know our background, you can probably even guess the company. But the company itself isn’t important to the story. The types of barriers to e-Commerce we ran into happen in ALL businesses.
Setting up an online store is like doing the decathlon
We’ve shared in other articles that setting up an online store is like doing the decathlon. You need to have multiple skills across marketing, digital marketing, technology, supply chain and finance to make it all work.
And in bigger business, that means you find internal experts in those areas.
Except that if you’re an expert in say, IT or supply chain or finance in a “traditional” business, it doesn’t necessarily make you an expert in those things in the context of managing an online store.
Setting up an online store has its own challenges. So, you need these functional experts to also be flexible and open-minded enough to apply their functional knowledge to a different context.
And that’s where you start to run into some barriers to e-Commerce. Because flexibility and open-mindedness can be in short supply in some business.
Post-launch review documents
After we launched, we worked with the project team to write a post-launch review document. This captured all the things we’d done during the project. And, what we’d do differently if we’d to do it all over again.
With the decathlete model in mind, we grouped the learnings into 10 themes. We linked each learning to a decathlon event. So, the 100m for example, we talked about working at pace. The long jump we talked about the launch point, and getting your timing right. And so on.
But the “event” and learning which most sticks in our mind was the 110m hurdles. Because, the hurdles or barriers were significant on that project. And on almost all e-Commerce projects for traditional businesses we’ve done since.
If you start your online store from scratch, you won’t have the same barriers. But if you already sell through traditional channels, then here’s some of the barriers (or hurdles) you’re likely to face.
The barriers to e-Commerce - and how to overcome them
These are all based on verbatim quotes from people in the business. In most cases, they were NOT from direct project team members.
We’d gotten almost all the team members happy to work on the project right from the start.
No, these quotes come from “stakeholders” and “decision-makers” round the business. They had an interest, but no actual role in the project.
“Nobody is interested in this any more”
So, the Managing Director of the business was initially on board and supportive of the project.
They’d come into the role from another part of the business overseas. They liked the idea of “their” business unit as one of the first globally to launch an online store.
Good start. Get the MD on board.
Except, for various reasons, the project then took 6 to 9 months after that conversation to actually start properly. And by that point, their attention was on other projects. The novelty had worn off.
And, when we’d finally secured all the resources to kick the project off, they outright told us, nobody is interested in this any more.
We took one big learning from this.
And that’s that you have to get to know your stakeholders. And if they have short attention spans and high expectations for quick results (as this one did), choose when and how to engage them very carefully. It would have been better to have more project momentum before we got them engaged in the project.
Ah, well. At least they didn’t pull the plug on the project.
“You need to be careful this doesn’t upset the retailers”
So, this one came from the National Account Manager who looked after our biggest retailer accounts. To be fair, he had a point.
When you launch your own online store and sell the same products as you sell through retailers, you become a direct competitor for them. Even if your online store business is small.
And that can get a bit awkward. Not to say, put your sales with them at risk.
So, we worked with him, on what the conversation would be with the retailer if they asked “why are you competing with us?”. We made sure pricing wasn’t going to be an issue (we sold at the recommended retail price). Believe us, you don’t want to compete against your own retailers on price.
And we also made sure, the online store benefit and positioning made it a different proposition from what the retailers could offer.
We prepared an objection handler for the trade teams. It showed our store would grow the overall category by bringing in new customers. Without taking away the retailer’s business.
It was a key lesson that your online store has to fit into a wider sales strategy. And you must have a clear and distinct role for each channel within that sales strategy. Interestingly, we didn’t get the same challenges from the Sales Director, who was the sponsor of the project. As he put it, anything that reduced our dependence on our few biggest customers was a good thing. So, he was supportive of the project.
(see our D2C challenges article for more on how to get the sales team on board with D2C).
“Our company isn't a retailer”
So, once the project started, because we were the first in the business to launch an online store, we suddenly had a lot of regional and global teams taking an interest. Our regional IT team offered to help. They wanted to be involved, so they could build their own e-Commerce systems skills and roll them out to other markets.
Which was helpful. However, when we took the global IT team (to whom the regional team had a reporting line), they couldn’t see the value at all. To them, the business was an FMCG manufacturer. One of them openly said to us “But our company isn’t a retailer, why would we do this?”. There was no e-Commerce culture in place to build on.
Now, obviously, to even start the project, we had put together a business case and business model which outlined the strategic and commercial benefits of the project.
This included the positioning, the IT skills required, volume forecasts and our planned profit and loss. We had to show the project would deliver a positive ROI in 12 months.
Our key lesson was to do the due diligence on the business case early in the process. This helps you overcome many barriers to e-Commerce further down the line. In actual fact, our ROI went positive in month 8 after launch.
So, in actual fact, yes, our company wasn’t a retailer. But pretty soon, it was, and doing it successfully.
“I don’t really see the point of doing this”
So, we mentioned earlier the project team were almost all engaged in project. But we did have one loose cannon who wasn’t totally on board.
Surprisingly, this was the digital marketer we’d seconded from the brand team. You’d have thought a “digital” person would have been one of the earliest converts.
But, no. The marketing team and this guy had a view that their role was to drive consumers through a branded journey. And that “sales” would take care of themselves after this.
They couldn’t see the benefit in us owning our own online “place” (if you know the Marketing 4Ps). They saw the launch of an online store as unimportant in the overall scheme of their marketing plan.
It wasn’t until we showed how the whole brand and store ecosystem would work together, that they really started to get on board. Then we showed how driving sales through our own store was more profitable. And how that could be used to justify future investment into digital channels. That got him really got on board. Money definitely talks.
In the end, they were on board and helped us deliver a strong joined up digital customer experience.
“It hasn’t worked in other companies”
This was a disappointing bit of feedback to get, as it came from the global head of digital. She rightly pointed out a few other FMCG businesses had tried to launch online stores.
However, when we looked at the case studies she shared, their business model was different from ours. They were also in markets and categories with a very different context to our project.
Our response was to acknowledge the lessons from the case studies. We said, where we could, we’d apply them into our project.
Though to be honest, most of those other launches had failed because they’d launched “big”. They’d pumped in a load of advertising dollars to support their selling efforts. Then, pulled the plug when they didn’t get a quick pay-off. We had a different D2C experience planned.
We knew the pay-off time would be longer. So, we ran the project in a much lower-cost and lean way. We ran it “small” as a pilot. There was a definite test and learn approach.
We didn’t actually do any advertising until Month 3. By then, we’d already started to get sales from word of mouth and links from the brand site. So, the store was soon self-funding. We made sure after it launched, that we didn’t need to go back and ask for more money. (other than normal budgeting procedures)
“Shouldn’t you drive your business with other retailers first?”
Another interested party was the Regional E-Commerce Director who hit us with “shouldn’t you drive your business with other retailers first?”
Fair question. But the answer was, we were already doing that. This was an addition to, not a replacement for our existing online selling activity.
The challenge was we’d started to hit a limit of what we could do with them.
Our e-Commerce planning showed us that D2C would give us more control and flexibility.
As per our online store business model guide, having an online store in addition to selling through online retailers gives you more options in how you sell online.
Plus, you’ve the benefit of direct connection with the online shopper. You have the commercial benefits as you own all parts of the P&L. That includes the selling price and all your costs, especially the delivery costs. And of course, you have the added benefit of control over the channel. No middle-men to deal with. It’s just you and the customer.
“I don’t think we should be doing this, we have other priorities”
And then, having overcome all these other barriers to e-Commerce, our local Head of IT decided to hit us with this one. To be fair, he didn’t have a big team at the time. And they did have other projects to deliver.
But we knew, he was also worried the workload would be too much. And any issues after launch would likely hit his team first. So, we had to go back to the business case. Walk him through why we were doing it. And what the overall benefit was.
We then also had to translate the benefit into what it would mean for the IT team. Because there was sales associated with the project, we could argue for more funding for his team to support it.
That got him very interested. As we said, money talks.
By the time the store launched, he was a major champion of the project. Because it worked, it gave his team much more visibility and status across the business.
(see our D2C challenges article for more on how to get IT on board with D2C).
“I don’t believe consumers would buy direct from us”
The finishing line was in sight, when we almost stumbled over this last hurdle from our Head of Regulatory and Legal. She didn’t think consumers would buy from us.
We’d spent a lot of time with her team, because setting up your own online store comes with a lot of responsibilities. There’s a lot of work to make sure you meet Privacy guidelines for example, because of the amount of data you capture. And that’s not even touching on all the Terms and Conditions you need to manage transactions, refunds and customer complaints.
And just as we thought we were there, we got this final challenge. We didn’t know for sure anyone would buy direct from us. Though we had some limited market research which predicted some would.
We’d also set the project up as a pilot / low investment project. So, even if we hadn’t sold anything, the business wouldn’t have lost much money on the project. (An $80k loss was the worst case by the way).
But we acknowledged the point. We re-iterated the pilot nature of the project. And, we held back on mentioning this ‘prediction’ when the store broke even 8 months later. And when it passed its first million dollars in sales before 12 months were up.
Barriers to e-Commerce - Crossing the finishing line
Our biggest lesson in overcoming all these barriers to e-Commerce was to be agile and flexible. This helps you find ways around them. And to have a thick skin and be resilient. Some of them, you just need to accept the “pain” and barrel through them.
Once the online store project got going, and had a clear launch date (our finishing line), these barriers to e-Commerce were easier to overcome. That store still exists today incidentally, though in an updated and re-branded format. But all those lessons have helped us navigate through many similar D2C projects since.
Check out our guides to setting up an online store and our learning about e-Commerce article for more about this topic. Or contact us if you have e-Commerce barriers and need help overcoming them.
Hurdles : Photo by Jeremy Chen on Unsplash
Sprint : Photo by Braden Collum on Unsplash
Thumbs down : Photo by Markus Spiske on Unsplash
Hand / Stop : Photo by Nadine Shaabana on Unsplash
Amazon on phone : Photo by Christian Wiediger on Unsplash