SAP Retail Forum: Retailers must adapt to evolving e-commerce model
Dallas – The e-commerce model is still actively evolving in response to changes in the consumer marketplace and technology. David Llamas, former CIO of British department store Harrod’s and an independent executive advisor, described how e-commerce has changed and is still changing during a session at the SAP Retail Forum on Oct. 8.
“In 2007, new e-commerce models like private sales, deals, and mobile commerce emerged,” said Llamas. “They have five times faster growth than traditional e-commerce models.”
Although mature e-commerce retail operations average 17% profit margins, Llamas said most new e-commerce ventures lose money at first, even if they ultimately prove successful.
“Gilt.com has not turned a profit for a full year yet,” he said. “Amazon.com did not have its first profit until 2003. It launched in 1995.”
To help reach profitability, Llamas said e-commerce retailers should look to emerging global markets like China, Russia and the Middle East.
“China will be the world’s largest online market by 2015,” he stated. “China’s e-commerce sales were $190 billion in 2012. Russia has the largest European online population and will reach $50 billion in e-commerce by 2020.”
In addition, Llamas said e-commerce retailers should use new tools such as omnichannel, precision retailing, CRM/clienteling, and analytics together to maximize their collective benefit. He left off with a few pieces of advice specifically for department store retailers seeking e-commerce success.
“You must lead, not follow,” he said. “Service and product differentiation is key. Technology is a key enabler to differentiation.”