4 e-commerce industry trends from eDelivery & IRX 2016

1. MARKETPLACE SELLERS CONTINUE TO SCALE UP

The IRX / eDelivery event has always been very well attended by marketplace sellers since 2010 when we first exhibited.. It sits in a great location for attendance by retailers in Manchester and around Birmingham, two parts of the country that are home to more than their fair share of enterprising companies.

The challenges being faced by the business owners we met were related to scaling their businesses whilst maintaining the lean approach that has helped them get initial market traction over the past 2-5 years.

Some of the scaling up issues and challenges on the minds of the marketplace retailers we met:

  • Maintaining customer service levels whilst continuing double digit or higher year-over-year revenue growth. Peak was of course their primary area for concern.
  • How to transition from 10-15 person operation with do-it-yourself systems into a 20-30 person company with more scalable processes and specialised team members.
  • Finding suitable warehouse space to grow into, without taking on a space that was too large and increasing their operational costs as a % of revenue.
  • Getting the most out of the warehouse space they have - mixing multiple products in one location and managing bulk storage locations.
  • Choosing which marketplace platform to work with, 'Should I stick with a platform like Linnworks that has served us well or be upgrading to a more advanced / premium platform like Volo or ChannelAdvisor?' and 'What are my other options?'.
 

2. KITTING & BUNDLES

Definition: A method of selling more products online by combining multiple SKUs and varying quantities into unique combinations to differentiate listings and increase sales.

Marketplace sellers and brands are using kitting to create a wider offering for their customers. The management and processing of these kits by the inventory and warehouse team seems to be creating a headache for business owners and Operational Directors.

One part of the puzzle is the concept of 'ghost' SKUs where a single product inventory can be used to show kit availability across multiple sales channels.

Another part is deciding whether to stock the kits in pre-made quantities and assign with their own SKU and barcode, or whether to store the individual products individually and build the kits on-demand.

The final part is how the software platforms they are using are setup to manage these kits and the compatibility between them if using multiple systems to operate their business.

 

3. CARRIER PLATFORM ALTERNATIVES

Every small, medium and enterprise retailer is likely to use or know about MetaPack and their carrier management platform. They've pioneered carrier management solutions in the UK, spearheaded by their top-end client base and industry leading event The Delivery Conference.

At this year's event Temando and Electio were prominent with their alternative solutions. They have added to the competitive landscape in the UK, which also includes Scurri, NetDespatch and NetDespatch powered solution Ship Theory.

More choice may simply be making the decision on who to use more confusing, however each proposition does differ slightly and they are targeting various market segments.

If you'd like to discuss the alternatives our team can give a view from what we've seen other companies doing and share what's working well for them.

 

4. MAGENTO FRUSTRATIONS

Magento has been the go-to eCommerce platform for growing retailers for the past 2-3 years. The majority of our clients use the platform and many have had great success with it.

We met a fair number of marketplace retailers who have implemented Magento on a budget and have found it's not really given them the platform for growing their sales they'd hope for. Key to getting success from Magento for marketplaces is getting M2EPRO configured correctly and I think some may have underestimated what's needed to do this well.

If you've got technical capability in-house which means you can do some of the Magento development yourself then it remains the go-to platform for medium business owners.

We're finding smaller retailers, usually brand owners are better off on hosted platforms like BigCommerce, Shopify and Visualsoft. The advantage of working with these platforms is you don't have to worry about hosting and most importantly site speed.

The appeal of being on a hosted website platform that scales easily has also meant some larger clients we work with and also companies we met at the show are going from Magento to Shopify+ and Visualsoft.

It will be interesting to see whether Magento 2.0 increases the number of companies doing this or whether it further cements Magento's position with medium-sized eCommerce companies. One factor that is working against it at the moment is the lack of ready-built plugins to Magento 2.0, one the strengths of the Magento platform, however we anticipate this will be short-lived as adoption increases demand for these plugins to be re-written.