The increase in retail sales is primarily driven by changing consumer preferences and technology. In most consumer categories, ecommerce now accounts for more than 20% of retail sales. This has resulted in manufacturers searching for new, exciting ways to adapt and succeed in this rapidly evolving industry.
An approach that combines multichannel distribution and direct-to-consumer means increased sales, higher profits, price control, and improved customer relations. How can manufacturers move beyond traditional distribution and sell their products online? Read on to learn more.
What is EaaS – (Ecommerce as a Service)?
A multichannel DTC selling strategy through an outsourced end-to-end ecommerce operation through Ecommerce as a Service (EaaS) combines software and services to enable brands to exploit the possibilities of a multichannel DTC strategy of sale. With this model, a brand manufacturer gains access to state-of-the-art ecommerce technologies, a shared team of resources across essential functions (IT, customer service, fraud management, analytics, fulfillment, finance/tax, etc.), and deep ecommerce domain expertise.
Ecommerce has been around for some time, but we find many businesses unwilling to take the plunge into it. Even though sales, consumer base, and profits have exploded, many established firms also find it challenging to transition from brick-and-mortar stores to mobile shops. Most changes are initially met with resistance until they become the norm. Gen X is the generation where e-commerce is the norm, making the old trade routes obsolete.
However, our species has always had to adapt in order to survive, and the same holds true for businesses. Social media platforms have opened up a slew of sales opportunities for businesses today. Therefore, a thriving business is one that optimizes its online presence by integrating facilities and features that optimize the speed and ease of trading.
There is no doubt that not all entrepreneurs are capable of creating, handling, and supervising the setup of an e-commerce platform for their business. Ecommerce as a service, on the other hand, takes a much more glamorous turn here. By utilizing a company that provides IT solutions to businesses, one can outsource their ecommerce development entirely to a group of experts in the area. Businesses that are eager to gain exposure on the internet can get e-commerce as a service from companies that offer it as a service.
With ecommerce services, your business can grow its virtual wings and take off online in an easy, budgeted, facilitated, and satisfying manner. Allowing a good service provider to create your digital image is the branding experience of a lifetime, with packages that include websites, mobile stores, admin dashboards, 24-hour online support, cloud backup, delivery apps, and more. You are actually betting your money on the winning horse when you give your service provider the reins of creation.
Why Should You Use EAAS?
Understanding EaaS and why brands would consider this option requires an understanding of the various functions of an ecommerce business.
Among the services they offer are payments and sales enablement, as well as marketing, customer service, and delivery. Despite the fact that there are many online platforms that provide support for these functions, including Shopify and WooCommerce, the components usually come from different companies, making integration difficult.
In order to overcome these limitations (particularly at scale), even established platforms often require third-party companies to perform certain services. It’s not guaranteed that a new online business will succeed. Studies show that 90% of them fail within 120 days. Among 1,253 owners of failed UK startup companies, a Marketing Signals survey found a combination of factors to blame. 37% of respondents cited poor online marketing, 35% said there was no online search visibility, and 16% said there was no customer service.
As a result, an EaaS company enables brands to get started or scale up with ease and at a lower cost while also minimizing the risks of poor execution or lack of focus on specific functions.
Do Customers Want Personalization in Ecommerce?
Content and products that enhance their shopping experience should be relevant, actionable, and exciting for each segment. By doing so, your brand will make shopping faster, easier, and more enjoyable. Creating a long-term, healthy customer-business relationship begins with personalization. We can illustrate the power of personalization by looking at a few statistics.
How EaaS Changes Everything
EaaS is also being used by established retail brands like Walmart as a means of generating revenue in addition to new companies.
Among the examples given is Walmart’s announcement that it’ll make its technology and capabilities available to small and medium-sized companies that want to serve their customers across channels better.
Walmart’s technology is different from that of Cart.com, as it is focused more on providing a seamless customer experience across online and offline channels – which also allows smaller retailers to reach local consumers. Retailers will be able to list themselves on Walmart Marketplace through Adobe’s partnership to access Walmart’s fulfillment network, which will allow them a broader online presence.
“We’ve built new capabilities for our customers, and we will be able to apply our experience and expertise to help other companies serve their customers’ evolving needs,” wrote Walmart US CEO John Furner in a blog post. The commercialization of our capabilities and technologies allows us to reinvest in our customer value propositions sustainably.”
Roll-ups a Rising Trend
Roll-ups are another way ecommerce brands can grow – and are becoming increasingly popular in the industry. They may be seen as an offshoot or part of EaaS. Retail aggregators or marketplaces acquire direct-to-consumer brands and then use their expertise and capabilities to help them grow. Many aggregator companies place a higher focus on capital and technology than traditional buy-outs, positioning themselves as platforms for digital brands.
This is best illustrated by Heydey, a digital platform created in response to the growing success of direct-to-consumer brands on Amazon Marketplace. Mark Crane, General Catalyst partner who led the $175m Series A funding, said: “Online marketplace ecosystems are transforming retail brands’ ability to launch and reach large audiences.”. “Heyday establishes a platform to leverage marketplace data to help those brands scale. Although aggregators can assist startups in overcoming growth obstacles, there are downsides to roll-ups, including founders’ loss of overall autonomy. However, it is clear that roll-up ecommerce companies – such as Thrasio, one of the few unicorns recently – are an essential indicator of how the industry is evolving, with strategy (as opposed to product) becoming the key to success over time.
Third-Party Brands Gain Competitive Edge
By connecting brick-and-mortar stores to its ‘Connected Retail’ platform, Zalaando is also using its technology and expertise. This means that Zalando takes care of all the ‘digital’ needs of partnering brands, such as content, customer service, payments, marketing, platforms, and infrastructure. Zalando’s Partner Program has a similar model but applies to businesses that wish to ship directly to consumers (rather than through their stores).
The Connected Retail platform, according to Zalando, can help partnering retailers generate an additional 60% in Gross Merchandise Volume (GMV) beyond their regular revenues. Furthermore, the visibility of local stocks increases footfall, and delivery options are more sustainable.
In order to truly understand and serve ‘joint customers,’ Zalando has built relationships with its retailer partners. Carsten Keller, Zalando’s VP for Direct-to-Consumer, told Business of Fashion that Zalando is working to improve retailers’ resilience. As a result, they are building their own e-commerce space using the information and practices.
Next’s Total Platform is expected to contribute to the retail brand’s continued success. The Next Total Platform offers retailers a comprehensive end-to-end online trading solution. All functions – including websites, call centers, warehousing, distribution, returns, and retail services – are managed by Next. In the retailer’s recent Annual Report, the company stated, “our goal is to deliver frictionless growth far faster and easier than clients can manage independently.”
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