2021 & Beyond
Perspectives from Retailers Turned Consultants
With ecommerce retail sales growing by 16.5% in 2020, retailers need to ask what the future holds for their ecommerce strategy.
Comestri’s own Ben Cook recently sat down with two former ecommerce retail managers turned consultants, Peter Ratcliffe and Patrick Rechsteiner to share their invaluable perspectives on where the online retail space will go in 2021 and Beyond – including their top 5 tips for ecommerce success in the near future!
Scroll past the video to access a written copy of the interview.
Recorded in March 2021
Ben Cook: Hi Folks, on behalf of Comestri, It is Ben Cook here sitting down as part of the BigCommerce 360 Summit for their Crystal Ball edition and I have the absolute privilege of sitting today with Patrick Rechsteiner and Peter Ratcliffe who are friends, colleagues and industry peers to discuss future trends and predictions in the ecommerce space.
One of the reasons for inviting you both today is I am fascinated by your background and both of you have been with big retailers with multiple brands and lots of stores, a large tech stack and different brands within themselves within the organisation, and now you’ve both come into a consulting role. One of the things that I’m keen to understand is if we look at a scenario where you’re a mid-sized retailer and you’re trying to grow, trying to scale nowadays, how do you start from a mid-sized perspective and emulate what you’re doing for a large retail perspective where you now have a larger pool of resources at your disposal. And secondly, if you’re in an embryonic or a new business or SMB retailer or small brand that’s trying to get to that mid-market phase how can you break through that ceiling?
General Manger – Business Development & Marketing
(PR Consultancy & Advisory)
Peter Ratcliffe: You know I say I have come from a large retailer however, there is some disadvantages in being a large retailer as well where you are held back by some of the systems that you already have in place. Small and mid-sized retailers can take advantage of that and look at new technology or they can buy into technology that can scale up and to me I think the biggest thing I tell them is you have got to have a phased approach, make sure you build the foundations properly and then that will allow you to scale and grow. Do not just go in there big bang I need to do this now without looking at building those foundations properly.
Patrick Rechsteiner: I think it’s really interesting that Peter’s just dropped into the disadvantage of being really big and the incumbents and it is something that is a feature of the retail ecommerce space but many of the different industries I’m fortunate enough to work in I see a similar phenomenon occurring in major players and some more than other do have incumbent positions but also a smaller-medium brand that’s done really well is doing so because it’s rewarding customers with something different. That is often on the back of a product or a service that is innovative or newer or something different whether it is a physical product or a SaaS piece of technology that is different.
The first thing I really encourage anyone whether they are large or small (easier if you are small because there are less people) to get the message out is to really understand what you are great at, what it is that is special and that is winning with customers from your product. Secondly, understand what phase you are in. If I am in start-up phase and I am worrying about cash flow and where the next sale is coming from, it is very different than at least having some level of incumbency as a bid marketer will. Then I am looking at optimising my current channels, adding some new line extensions and different products, and maybe finding some new routes to market whether that’s an additional channel whether it’s a marketplace or a marketing channel or whether it’s an additional geography or territory and really understanding where those two things come together.
One of the real key features of that size is not being the biggest thing but it is that speed.
Where you can leverage technology that can help you gain speed as a smaller player, you are already a faster runner than many of the big guys.
Not all of them, there are some big organisations that do speed and testing in the market really well, but that is where I would encourage a business of any size to focus. You do not need to do what everyone else is doing great, but you need to understand what works for you and how to get it out there fast.
Peter: And it is quite easy and much easier with SaaS technology whereas in the larger retailers they never had that initially when they started so emerging smaller retailers have a much bigger advantage.
Ben: That is an interesting point Peter, I mean at the end of the day, big organisations now are still a bit hamstrung with on-premise solutions with big data banks and monolithic systems of the past whereas in that big market space where you can ideally choose a SaaS based system, turn it on and get into a proof of concept much quicker you’d hope for a faster ROI.
I guess to respond to that, if you are a mid-market retailer and you are still open, you have got some cash to spend, you have got some brand established and you know you are trying to scale you can choose channels that can get there maybe a bit nimbler. On the other side, what about if you are a smaller retailer and you have got to start to think about where am I going to put my dollar and what am I going to back it with?
Patrick: I think I am going to continue from what I was saying before about knowing who you are and what you are good at. Especially a lot of smaller brands have people who are more on the product or creative side who have come up with something or if we are talking in the tech world, I think brands like that would do really well to become a little bit more familiar with just the general framework for which their customers are loving, what they’re doing and following those channels.
For instance, if we start noticing in our analytics with a small brand that suddenly someone from New Zealand or the United Kingdom are starting to pick up our products, well that tells us really quickly that we can follow the bouncing ball and that there is probably a really low cost easier to win at option in different geographies. The same thing happens with different marketing channels. I think the trick with a brand like that is to start testing and trying some of those different bits and pieces and following the data as it goes but always to remember that you do not have to do everything, as a small brand entrepreneur does not have the time or resources to do a little bit of everything. If we stay great at what works for us and focus on the channels that are generating wins and doubling down on those then that is the best place.
To do that, you also must be willing to shut down some of the things that are not working. There is no need to go open a store in London if no one in the UK is buying from your website it is probably the wrong thing and I see that’s a really obvious example, but I see that type of thing happening quite often with smaller brands trying to do too much of too many things without doing them well.
Ben: Do you see the facilities in play nowadays to be able to do that, whether it is a store, a marketplace, Instagram you know these kinds of areas where you can test the market with your brand and your brand association.
Patrick: Absolutely. From a go to market perspective which lets you know marketing to customers whether it is Instagram or digital ads or traditional media (which we should not forget about), it is just so powerful for some brands whatever that market is. There are so many opportunities to turn things off and on and test quickly there but also from a retail perspective so natural physical sales channel, there are drop shipping arrangements available all over the world for you to locate your products, there are many different fulfilment methods or marketplaces out there to both get the product sold to a customer on the channel and fulfilled to the customer via the logistics network. I think the key is understanding that if something is not working there it is strategically foolish to keep banging your head against the same wall. It is better off to acknowledge that part as a test that came out negative and go focus on trying another route to market and that is where technology can really help. You get those things up and down quickly.
Peter: I agree with Patrick you have got to do what you do well, focus on those things but the beauty of digital and tech now is that you can very quickly try things and if they work you can keep going and grow on them. But you can also quickly turn things off that are not working and get retailers to focus on their analytics and make sure to have a look and see where their customers are, what they are buying, what they’re doing and how they are going to increase conversation rates. Some things may look great on the outside but really do your return on investment because some of them just will not work out. Do not offer free delivery if it’s going to cost you $15 every time.
If you’re going to send something that is very lightweight but it’s still going to cost you $15 that’s $15 off your bottom line so you know you have got to do those calculations to make sure what you’re doing is actually going to make you money and not send you broke.
Patrick: I love that you brought that up because one of the other things I see smaller businesses make the mistake of is chasing top line sales without profitably growing their business. Sales do not grow your business, profit does. If we’re talking about growing at speed, if you have a strong ROI model let’s say for instance in your digital marketing, if your margins are strong enough that you get a very strong return on ad spend then that is a great place to generate more profit for your business. Far better than other places and that region is different for different brands so you really need to follow that. I do not want a $20 million business that makes me $1 every year. It sounds so simple but there is so many businesses that forget about that simple basic rule.
Peter: Exactly! ‘Oh we’ve got to offer free shipping we’ve just got to do it’ and I say hold on a minute you’ve really got to step back and think how much is this going to cost?
Ben: It is interesting, I did once work with an organisation and they got all excited about selling coffee machines to New Zealand from Australia until they realised what the freight bill was going to be.
Patrick: I remember having a record sales month. It was one of my first months with a brand that I worked with and we celebrated and everything else and then two weeks later I saw the P&L and anything but a record profit month and you know that is the sort of misalignment that can hurt you. Probably not in the short run but that can really hurt you in the long run. Working with you they do not understand that fundamentally.
Ben: I guess nowadays especially with the balance of the amount of money you can spend on digital spend and digital advertising, there are some phenomenal budgets to try and win the eye of the consumer. Patrick, have you found that you have really got to balance when you talk about P&L, there is one thing selling product and everyone is going crazy for it, but if you have just spent all of your money or all your profit on digital marketing how do you balance that up over the course of the month?
Patrick: I am fortunate my first career outside of university was not in digital or retail but it was in corporate finance so I am a nerdy accountant at heart. I have always balanced all of my digital marketing data with a very strong commercial side and I think that is absolutely paramount as a CFO is only going to sign off budgets if it is profitable at the end of every month. That is a language that every marketer or ecommerce professional needs to learn to understand and it is incumbent on the marketers to understand how to speak finance not the other way around. I think that is a big gap in the skill set of several ecommerce and digital professionals and it is a particular one that brands who are engaging with agencies need to be aware of. Some agencies are very good at speaking that language and inherently understand it, other ones will lead you down the vicious cycle of throwing more money down at a decreasing return and it is a challenging one. I just think about the data, but it is about not just thinking return on sales ad spend data, it is about a more nuanced and holistic approach across the business. Managed correctly that vicious diminishing return cycle can become a virtuous cycle on the way up that just keeps kicking in more profitable marketing spend and generating extraordinarily rapid growth and that is another potential of the world we find ourselves in today that you can really accelerate your growth fast and that is true for big organisations as well.
Ben: I am going to change tack a little bit because I do want to play with both of these backgrounds of you two, where you have come from you know internal to now external and talk a little bit about tech platforms on the one hand and the investment in technology in the other, and you know we’re in the tech business so may that long continue, but then also people and processes is often not necessarily recognised for example internal change risk, change management etc. and I’m interested in both your thoughts on the difference between whether you find that a little bit easier now you’re on the external rather than when you were on the internal?
Peter: I think people and process is always a major issue with any tech especially when at the moment there is such a high turnover in digital all around the country, people moving across companies all the time. I think the biggest thing is that you have to look at tech, but you also have to spend that extra time in making sure that the processes are going to make that tech work.
A lot of people just rush to put this system in and put that system in without thought of if for example, you are putting an order management system in place for click and collect, asking the questions ‘is my inventory correct? how do my store people understand how this all works? How are they going to cope when there’s customers in the store and they’re still having to go and pick orders for click and collect or store to door?’
A lot of businesses will just throw the tech at the staff, but others will utilise the whole process and aim to make it work by ensuring that the processes are in place to make that tech work and get the true return on investment on the tech. However, some do not have the staff to do that either so there is no point in throwing tech at the problem because if the process and the people are not right then it is not going to work.
Ben: Often tech can be blamed but sometimes it is the analysis of people and process.
Patrick: I think this is a really common issue in businesses. Many organisations particularly from the top level know a huge amount from the executive level about what the tech should do or what the potential in the tech is, but they do not know how well we as an organisation are utilising our tech. Many times, we will say ‘hey we have this email platform, and we need a new email platform as this one doesn’t do what we need.’ However, when you look under the hood, less than 20% of the functionality of that platform is currently being utilised even though 100% of it is being paid for. That is the equivalent of having a store open 20% of it’s trading hours, no one would ever do that but that is a really common thing.
Also, there is a huge amount of focus on the individual people in an organisation from recruitment to management to taking care of them to making sure they’re engaged and developed and promoted, but there’s far less effort being done by most organisations on the process through which those people work together and in ecommerce you have a very multi-faceted world where from product to customer facing technology to back-end technology to content to design to paid marketing, unpaid marketing, etc. it all has to work together in a bit of a synergistic dance.
Process might sound like a boring term, but it is really how well are our people are going to work together to serve our customers and I do not think there is enough executive level attention paid to that. It is not very hard, it does not take very long and once you nail good processes then you can train people in the processes. The amount of effort spent between the lines from senior to middle to front line workers when processes are not very strong is another huge underutilisation of people’s efforts let alone the inefficiencies. Then people complain and talk about how the system does not work and pragmatically it is a massive issue. I do not think anyone has worked out a model yet for how to quantify that but it would be a smart person and rich person that could figure it out because that is a huge sink and one that is probably one of the reasons for incumbents becoming slower and more bureaucratic because there is a lack of processes so therefore, things become a bigger issue.
Peter: And if they do not do change management properly and process management then it will always be the tech’s fault no matter what.
Patrick: Absolutely! A poor builder blames his tools, right? Yes, you can get better tools, but you need to know how to utilise those tools. If I buy a Ferrari engine and drop it into my car but I put it into the boot, then it is not helping me very much is it? It is that simple but unfortunately it is the unsexy thing to talk about but this is a People & Culture issue as much as it is a customer issue as much as it is a tech issue because people become frustrated by poor tools and customers then get poorer experiences. Digital is so wide in organisations and now that these become issues that impact every silo or every function of the business, they deserve executive level attention.
Ben: Just to pick a couple of examples in that, we talk in the industry a lot about customer experience and about unified commerce, when you both go into these organisations nowadays do you see that properly aligned from sales channels all the way through fulfilment, customer service, returns, refunds? That whole concept that you have mentioned there Patrick is that it is all about the dance within the organisation. Are there processes that align to those facets of unified commerce and customer experience that an organisation is doubling down on?
Patrick: For me it is a mixed bag but if you can win at that every function of your business operates better.
Peter: Absolutely! I have had it where all they want to do is put in click and collect and the first question I ask is ‘do you actually know what stock is in your stores?’ If you do not know that how are you going to provide a great customer experience when that customer goes in to pick up his product and it is not there? I have a business that we are working with and we showed them the functionality within their current system that it can absolutely do click and collect/store-to-door and the business turned around and said ‘fine now we know that the technology can do it, we have to work out our processes. We are going to have workshops on how returns are going to work, how pickup and store to door is going to work before we even turn this technology on.’ They are absolutely doing it absolutely the right way.
Ben: I always find there are a few what-if scenarios in there as well if we do not have product then where are we going to get product? When is that going to come? What is the price back to the customer? Who is going to communicate with the customer? Those things are changing and there is a lot that goes into that let alone reverse logistics which is a lot harder that one way logistics.
So given that we are talking about internal tech stacks, what importance do you think organisations of different shapes and sizes who play on that technology audit or that internal audit of their own tech and then wrapping that around with people and process?
Peter: It depends on the size of the business. Quite often you can do an audit of the tech stack and they say ‘well we are stuck with the erp so work around it’ and then you have to go and try and find some middleware to be able to get some data from one system to the other and that adds a failure point to it. On the other hand, there are those who have a great tech stack but do not have the skills or processes in place to be able to use it properly, so you walk in and think ‘wow you’ve got everything in place here’ but then nobody knows how to use the system. There is definitely a mixed bag.
Ben: Patrick, you talk about attention to detail in terms of bringing people in and the amount of investment that goes into hiring processes, is the same amount of investment going into training people within the business on technology that arises or are we usually too busy doing our jobs?
Patrick: It is often one of those things and training should be a part of our jobs. Take the Ferrari example. No one knows how to drive that car and it looks pretty in the garage, but I think that on average it is not scoped properly into the timelines or into the cost. It is thought about as the part that we can do without if the project is getting expensive.
What I often think is that sometimes that you get someone expensive and big to implement technology and they can often go with the training costs at the same cost as the implementation cost and that just does not feel right. I think this is where this becomes a People & Culture issue and a workforce development issue to get people utilising that new technology and to get people from across the business onto the technology sooner and involved in it.
I think there are clever lower cost options using a bit more of a lateral mind about what is important to our organisation. There are ways of training and implementing in a much better and ongoing manner. That has got to be in my view a bigger part of the conversation as opposed to a huge incremental cost where we recognize that it is important to do.
Ben: We have talked a little about trying to take advantage and trying to use technology to back that up and looking at people and process, current tech stack, new tech stack etc. however I am always hopeful that these panels can give people something to take away…
What would be 5 quick wins that you would say an organisation could do in the near future to improve their position for this year?
The first one is audit your data model, your data framework. Is my data centralised? Is it clean? It is easy to access? Where do I get it from? Where do I store it? How do I utilise it? That is the framework and that is the central nervous system that all new tech is going to feed into and come in and out of. That might be a really long project to actually fix if you’ve got massive issues there but do an audit fast and in that audit include what is our strategy on first party data. This is going to be a very big topic and significantly enhance or limit our marketing opportunities in the next 6-12 months and beyond. There are a number of privacy things coming in for the right reasons, but they will impact digital marketing strategy so that is number one.
The second one is focus on speed. Can we quickly get things up and get them off or do we have an issue there? Can we plug into another marketplace with our existing product data or if not, where are we at from speed? Make that a key KPI. We do not have to do it every month but once a year we should be looking at how quickly can we get new digital projects up and down and what that means.
Number three is revisit your strategy and by that I do not mean what your strategy is but your definition of strategy. If a corporate strategy has more than five high level points it is too complicated for your business to understand. If a brand strategy has more than three points of difference with it’s communication, you are never going to be able to communicate that in a crowded marketplace. Revisit what you know of and how you define strategy within your organisation to simplify if the strategy is based as much on what it is as to what the things you say no to and that is a big issue sometimes.
Number four, people and processes are a customer experience and a People & Culture issue, a finance issue, all of these things and need to be treated as such.
Number five, is one that I am particularly passionate about, think globally. I am originally from Canada, I am not from Australia and Australians and many countries often think they are too small and that they cannot compete on the global stage. You are wrong. You can compete, your products are just as good if not better and in the world of retail ecommerce we really need to have a go because we have the capability but sometimes, we just do not have the belief.
I think the biggest thing at the moment is to quickly invest in your customer experience and look at your customer experience online. How are you going to make that journey easier? Make it seamless and make the same experience across all of your touch points. There are a lot of websites out there that just do not cut it in customer journey and customers are lost so look towards A/B testing to make sure you are getting that experience right across all the channels.
Secondly, audit your data, check your data. You have really got to try and get a 360 degree view of your customer to know where they are buying and what they are doing with everything to do with your business and use AI where you can to get control of these insights because you are not going to have the manpower to analyse all of the data and make recommendations as to what they are actually looking for. I heard a saying the other day that AI is no longer artificial it is beneficial so maybe we should call it BI. I think it makes so much easier in all aspects of on-site experience and for when you are segmenting your database, targeting and personalisation.
Focus on loyalty. Loyalty is not all about discounts and you have got to do some value-added services with your customers. It is a lot better, cheaper, and easier to keep your current customers than just trying to acquire new ones all the time. If you can increase the customer lifetime value of your existing customers, it is going to be far more beneficial than going out there all the time especially with the cost of acquisition getting higher and higher.
Payment choices would be another. You now see so many people out there and so many websites that have 10/12/15 different types of BNPL options as well as your standard Paypal, Visa, Mastercard and so on. There has got to be technology that can help the customer choose what option is right for them and make it much easier to integrate. Customers wants lots of choices, so we have got to look at a quick way to highlight.
Another one is also sustainability. You have got to really look at your core focus on sustainability. Customers are becoming more conscious about protecting the planet and they are purchasing from companies who have policies and procedures around sustainability and recycling and so on, so you have got to look at that green side of your business as well and make sure that you are doing what you need to do to keep your customers happy.
Ben: that is an interesting last point Peter. I think even if you’re writing that all over your products just what your brand represents and publication of your own policies within a brand, I think is becoming ever more important nowadays.
Look fellas, it is always an absolute pleasure to talk to you both and I cannot thank you enough on behalf of Comestri for sitting down and taking the time to share your thoughts.
Peter: Thanks Ben