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The Coming E-Commerce Paradigm Shift
Distributed merchandising networks are changing the way companies build customer relationships.
Posted Nov 15, 2004
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An expansion is definitely occurring in the way that brands and products are reaching consumers, not just in the number of channels, but also in the number of value-added intermediaries involved in each promotion or transaction. Retailers, catalogers, and direct marketers are connecting with customers where they shop and buy through partner-enabled channels combining services from merchandisers like Amazon.com, advertising portals, and affiliate networks. These are distributed merchandising networks (DMNs). Also, online shoppers are becoming savvier at evaluating competing product offerings and merchants on the Web. Whether they purchase online or offline, shoppers increasingly base their perceptions of a retailer's selection, service level, and brand image on the online experience. The depth and quality of information that retailers provide through online marketplaces and shopping portals exceeds that of other promotional tools like search engine marketing. These channels are as critical for establishing credibility with consumers. As buyers become more informed and have more choices of where and how to buy, merchants have to understand how and where they gain or lose customer trust. You can drive traffic to your online store all day, but if it's hard for customers to find the right product, if items are out of stock, if returns are difficult--you're wasting your budget. Retailers that expect a high ROI on their merchandising dollars have typically established and are meeting a published service level defining their fulfillment terms, customer service level, and so on. You can't fight bad service and a bad reputation with more ad spending for long. Once you've addressed the service-level issue it becomes a question of creativity in reaching your customers, both in getting your message in front of them, and then in establishing an emotional connection. That can be hard to do in a comparison shopping environment, where more and more sellers are meeting more and more customers on what you might call "neutral ground." Again, it gets back to offering the most complete and timely information about your products--and at the same time, communicating your unique value proposition, whether it's price, service, or domain expertise through the merchandising medium. Knowing what sets you apart from your competitors--ideally, a combination of all of these benefits--makes it easier to create consistent messaging across channels. There's a timing element to this, as well. To be competitive you have to present the most current information in terms of inventory and pricing to your customers, whether they are on your own e-commerce site or within a remote channel. With the advent of more structured tools based on XML Web services, it's possible to greatly improve the timeliness of data presented to customers through third-party channels.
DMNs imply a growing "distance" between the customer point of sale and the seller, and an increase in the number of intermediaries involved in merchandising and selling. The ability to manage these intermediaries becomes a key driver of sales performance, brand stewardship, and customer experience. Retailers, catalogers, and direct marketers should approach these distributed partner relationships with the same level of intelligence and discipline that they have applied to their direct sales operation. About the Author Eric Best is founder and CEO of Mercent. An experienced entrepreneur and manager of strategy, people, and process, Best founded MindCorps in 1996. MindCorps customers included Microsoft, Universal Studios, Kodak Polychrome Graphics, Hasbro, and Network Associates. In 1999 Best created a spin-off software product firm, Emercis Corporation. Best orchestrated the sale of MindCorps to Amazon.com in 1999 and the sale of Emercis to Impressa Inc. in 2000. He managed business development for the Amazon.com Commerce Network, working on the deal team for Amazon's first major brick-and-mortar partnership with Toys"R"Us. Concurrently serving as director of Ubarter.com, Best helped facilitate the sale of the business to Network Commerce in 2000 for $45 million. Prior to his work in the software industry he performed immunology research at Bristol-Myers Squibb's Pharmaceutical Research Institute in Seattle. Best holds degrees in business administration and biology from Seattle Pacific University. He can be reached at eric.best@mercent.com
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