Lessons US Online Retailers Can Learn From International eCommerce Sites
Growing eCommerce business is not a feat for the fainted heart, especially if you do so in a developing market. eCommerce entrepreneurs in Brazil, Russia, India and Singapore are dealing with logistics, lack of suitable ecommerce technology and untrained staff. Yet, they still need to meet the expectations of VCs and grow consistently, while adapting to the market and educating the audience to shop online.
Most of the time, they learn a lot from the US market and develop custom tools, technology and processes to work around their business conditions. Thus, the common notion stands that all the knowledge comes from US and Western Europe. Though, it is mostly true, there are a number of lessons that US eCommerce sites and retailers can learn from the international peers.
Take Yebhi.com, for example, one of the top ecommerce sites in India that makes $35 millions in sales (last year) and sells apparel, footwear, jewelry, electronics and home wares. Scaling an ecommerce site, funded by VCs in a developing market poses its challenges not only due to the fact that you have to develop infrastructure, but also to cultural specifics.
If you do eCommerce in India, prepare fighting daily with its market-specific challenges: finding more customers in a country that’s mostly eCommerce illiterate, aggressive pressure from VCs, lack of support from the government, and a longer road to breaking even without external funding.
This business requires a lot of money to scale, especially if you are building the industry from scratch in the market that is still discovering what online shopping is.
Yes, it is a fact that India boasts of 6M people accessing Internet, while in affect only 3M are shopping, the rest are just charging their phones or have no means, or experience to transact online. Plus, the supply of eCommerce stores outweighs the demand. There are more goods online to purchase, aggressively discounted than shoppers able to buy.
So, what does the team do? It scales through better processes in operations it observes, testing human behavior and experimenting with technology. The team looks at ways to reduce costs in operations, marketing, fulfillment and customer service.
For example, the team reduced call-to-order ratio from 52% to 23% by placing as much video and text copy as possible regarding return and other related policies. They hid the phone number and tested this experience for a week. Orders did not go down, emails increased and calls went down. Before the change, the team would get 5,000 orders a day with 2,600 calls related to orders. After the change, they received 7,000 orders a day with only 1,600 calls. Thus, the improvement also increased the number of orders (profit) and decreased costs associated with order-related calls. Plus, the number of returns also decreased from 15% to 3%.
Many smaller US retailers pride themselves on being able to provide phone support, thus trying to differentiate themselves from the big guys. At the same time, phone support is super costly. The question is why not leverage the web as much you can to do both – offer that support effectively and save on the costs. Yebhi relies on synced Twitter and Facebook posts with their CRM and customer support systems to be responsive, nimble and cost efficient. They use the tools that already exist. And working with what you got is the best way to grow smart.
In addition to reducing the call-to-order ratio, the team also reduced the rate of first time resolution (FTR) vs. repeat customer calls. The Yebhi.com team approached this problem with two solutions: business process optimization and software to automate repeat activities. They found that 70% of the time customers called after their order was placed, while 30% of calls were made before the order was placed. Most of the time, agents would spend six minutes per call; with 1.5-minute hold time to check the details of the order in the system and to log a ticket. Yebhi team identified the various kinds of information sought by the agents after the order was placed (ninety-six states of what can happen to the order, which resulted in twenty questions for 90% of scenarios) and hardcoded the answers into a system that would spit out all the information needed for the agent in a text format. All that the agent had to do was look up the order number and choose a question. The system logged this action as a ticket automatically. This reduced customer service agent (CSA) time to three minutes and twenty seconds. Plus, the fix only took four developers and just three months of coding work.
These are just two examples of how to scale to profit faster. In my book, Yebhi.com story has 10 ways the team optimized for higher margins, including finding the best combination of online promotions based on testing and adjusting to human behavior and using advanced applications of conditional reinforcement (the same thing we experience in casinos, playing jackpot).
Within the year of vigorous testing for conversion resulted in the effective change from 1.2% to 2.3%.
Heavy slicing and dicing of customer data (surgical segmentation as I call it), was one of the best strategies to optimize effectiveness of email campaigns. Yebhi.com used to send five emails per week, but now it only sends out emails twice a week and enjoys higher open rates and click-through rate (CTR).
Get full coverage in the book.
Next week, I will also be holding a workshop at eTail West 2014, where I will address this topic. See you there or back online here with the new insights from the event.