“A blank sheet for creativity”
Source: CxO Magazine; February / March 2014 edition
E-commerce is seeing explosive growth in Belgium. With an annual turnover of almost 3 billion euro, consumers appear to have embraced e-commerce en masse, and are confident to buy online. There is also considerable movement in the B2B world. “E-commerce is a blank sheet for creativity. It has opened the way for new business models”, says Steve Muylle, professor of Marketing and Digital Strategy at the Vlerick Business School and member of the CxO Expert Group.
Buying online seems to have broken through in Belgium. According to Be-commerce, an organisation that aims to strengthen online shopping in Belgium, the turnover in the online shopping market amounted to some 3 billion euro in 2012. The organisation expects this figure to have risen by a fifth in 2013. Recent research carried out by the retail federation Comeos and the market research institute InSites has shown that clothing and shoes were the most popular purchases in 2013, and that the over 45s are keeping up with the ‘youngsters’.
Another key conclusion from this research is that price has become the main reason for purchasing something online. As comparing prices is easier in a digital environment, it is likely that in the future, online players (online shops) will differentiate themselves in terms of price, whereas offline players (physical shops) will once again have to focus on service. In the future, will ‘the bricks’ (physical shops) become synonymous with ‘service’, while ‘the clicks’ (online shops) offer the lowest prices?
There is also movement in the B2B sector. As professor of Marketing and Digital Strategy at the Vlerick Business School, Steve Muylle has been researching the impact of e-commerce for some time. As well as teaching the ‘Digital Strategy’ course, he works closely with well-known Belgian firms, helping them to create national and global internet strategies. “It is hard to generalise, as B2B on the internet manifests itself in many different ways,” says Steve. “One thing is certain: e-commerce in the business world is a blank sheet for creativity. It has opened the way for new business models.”
Steve sees obvious differences between B2C and B2B. “With B2C, the purchasing process is usually limited to one person buying something and paying by card. Online buying in a business environment demands a different approach and is on a completely different scale. Whilst previously, e-commerce was entirely in the realm of the sales and marketing department, it has now become a narrative that connects the whole company, from the buyer to the senior management team.”
“A company’s purchasing department is often involved. And as a buyer, if you buy online, then the most important thing is efficient integration with the internal buying process. It is therefore also in the supplier’s interest to tune the e-commerce activity into the buying process. We even see product specifications being adjusted for online sales.”
E-commerce is an extra sales channel
In a business environment, the e-commerce channel is often integrated as an extra sales channel alongside existing channels. Steve Muylle notes: “Some companies can significantly increase their turnover thanks to this extra channel. But in reality, an e-commerce channel means extra investment in technology, knowledge and marketing, which puts pressure on the business case.”
“Another trend is cost cutting: doing more with less. Instead of expanding the sales team, companies set up an online sales channel in order to generate extra revenue.”
Steve also sees large online B2C players like Amazon moving towards the B2B market. The number of internet sellers that offer their products for sale via Amazon has grown to two million over the past year. In 2013, they sold more than a billion articles via their trading platform. Not only did Amazon’s international webshop index feature their products, but it can also take care of payments, fulfilment and shipping. Steve Muylle remarks: “What you see happening is that for example, builders who need professional building materials go to the physical shops for information, but end up making their purchase online via Amazon. This is something that companies have to take account of: they need to develop strategies to cope with this, whilst keeping in mind the opportunities offered by digital technologies.”
The battle for the fastest delivery: ‘anticipatory shipping’
In any case, the battle in the world of e-commerce is being played out in the field of logistics. Recently, Amazon in the USA took out a patent on so-called ‘anticipatory shipping’, whereby it aims to ship products before they have been purchased. In other words, based on internet behaviour and prior purchases, Amazon aims to estimate what a consumer will purchase at which time. “It seems to be turning into a battle to deliver as rapidly as possible,’ believes Steve Muylle. “The battle is raging. If the delivery can occur near-simultaneously with the order, the classic ‘not stocked’ argument no longer applies and some offline retailers are even beginning to go down the line of ‘Internet Beating Prices.”