Profitable commerce: How to boost revenue and beat the competition

The e-commerce market has grown nearly 700% since 2011, ballooning from $680B to $4.92T in just 10 years. By 2025 – a mere three years from now – it’s projected that one out of every four dollars spent will be through e-commerce channels.

Only agile brands that continuously innovate can compete in this fast-growing market. What works today may not work tomorrow. Success requires constantly monitoring market trends, adapting to them, and sometimes making wholesale changes.

An ever-changing digital landscape requires agility to adapt quickly – meaning your e-commerce strategies should line up with what consumers expect to get ahead in today’s “winner-takes-most” digital arena.

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Pivot & capitalize: Examples of profitable e-commerce strategies

Brands must constantly look over the horizon to understand market and customer trends and identify new business opportunities. They need the flexibility to quickly pivot and execute effective strategy changes to capitalize on emerging trends.

Some examples of the best e-commerce strategies include:

1. Trying out new business models like subscription services, which can create a more stable and predictable revenue stream
2. Building an online marketplace to provide a single place for your customers to buy
3. Adopting an “everything-as-a-service” (XaaS) offering to create customized services that meet the specific needs of each client at a price that makes sense for them
4. Adding new direct-to-consumer tactics, such as selling in trendy customer engagement channels such as TikTok or Instagram

Brakes, a B2B food delivery service and a top supplier to the food service sector in the UK, made a quick strategic pivot when COVID hit. The company decided to sell products directly to customers by creating a new D2C channel in just seven days.

Families were able to shop for groceries safely from home. Hospitals and healthcare facilities continued to be served while more than 1.5 million care packages were distributed to the most vulnerable. Overall, Brakes made more than 6,000 groceries accessible to 6.8 million households in the UK.

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Take a holistic view: End-to-end commerce

For years, digital commerce organizations focused mainly on top-line revenue growth, which made sense when e-commerce was seen as a growing, but still small part of the revenue mix. But now, with its bigger revenue contribution, they need to focus on the bottom line.

Understanding and effecting change to the drivers of both revenue and costs is critical for any e-commerce strategy.

At the same time, customers expect a frictionless experience, from discovery and delivery to after the sale. They want real-time transparency into products, pricing, orders, availability, and fulfillment. Whether they’re a B2C or B2B buyer, they want speed and convenience.

For example, customer demand for options like next day or same-day delivery, free delivery, buy-online-pickup in store, and hassle-free returns, can eat away at overall profitability. Consider that 50% of delivery costs are incurred during the “last-mile” from a store or distribution center to your home.

Moreover, processing returns is costly, especially for online purchases where return rates are around 30% compared to 9% for in-store purchases.

In order to meet customer expectations while maximizing profitability, brands need one, integrated office view across the business. They need access to enterprise-wide data and insights across the entire end-to-end commerce journey in order to make optimized decisions and strategic adjustments.

Maxim Integrated, which manufactures and sells analog and mixed-signal circuits, leverages a holistic customer view to drive more profitable e-commerce experiences. With a connected platform, they streamline supply chain, shipping, and warehouse logistics for better efficiency. The results are truly remarkable: almost 10 times in revenue generation.

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Build with an eye on the future

Often with e-commerce growth comes complexity, and your e-commerce strategy needs to account for it. Adding new channels, adopting new business models, expanding into new regions and countries, adding more products and SKUs, opening new fulfillment centers and stores, and of course adding new customers will compound the complexity.

Brands may have to acquire new e-commerce capabilities, build or change integrations between systems, and ensure that their e-commerce platform can scale and perform in a secure and reliable manner.

Here are some requirements to keep in mind:

• An integrated, modular design simplifies operations by providing end-to-end commerce functionality beyond simply “content, catalog, and cart.” Functionality like order management, PIM, and content management helps you deliver on your brand promise to customers at every touch point.
• An open platform allows you to innovate by easily adding new capabilities that can differentiate your brand, without spending valuable time and resources integrating and maintaining multiple third-party solutions.
• Support for global operations, including multiple currencies, languages, and local data protection and privacy regulation compliance, to minimize risk to your business and build lasting trust with customer.
• Compliance with data privacy and preference regulations to further build customer trust.
• Maximum scalability, reliability, and extensibility so you never worry about outgrowing the platform.

With an enterprise-grade commerce platform, ARYZTA, a consumer products company based in Ireland, deployed new functionality 90% faster, and lowered their TCO by reducing time spent on online store maintenance.

This post was co-authored by Bernard Chung, Senior Director, Solution Marketing, SAP.