E-Commerce is booming in many parts of the world. The pace of growth varies by geography and category, but it seems that the world is waking up to the fact that e-commerce is coming: the only question is how fast. Adapting your business to e-commerce brings with it many opportunities, and no shortage of challenges. Building a sales team which is ready and able to manage e-commerce channels and retailers is hard, but in my experience some of the more unexpected challenges come from the impact e-commerce has on your existing offline business. So what should a sales leader consider when building a sales team for an omnichannel future?
Building a sales team dedicated to eCommerce may not be the answer
It sometimes seems that a corporation’s automatic response to a new phenomenon is to ‘set up a team’: and the responses to e-commerce are no exception to this. And while building a sales team focused on managing these fast-growing, potentially important customers is potentially a good idea, it runs a very big risk. Building a separate e-commerce sales team creates an additional silo, which is never beneficial. It makes managing customers who are both on- and off-line difficult (which team manages them?). Fundamentally it creates an artificial split in the sales team. Building a sales team in this way does not reflect the world outside your office. Shoppers are looking for a seamless experience. Retailers are increasingly becoming omnichannel. A separate e-commerce team is less likely to be able to respond to these needs than one carefully integrated into the existing sales team.
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But the biggest risk of building a sales team dedicated to e-commerce customers is that this suggests somehow that the impact of e-commerce on a sales organization can somehow be contained: that e-commerce is a thing unto itself, and can be separated from the rest of the organization. If this happens this is a grave mistake. In our experience the impact of e-commerce spreads far beyond the actual business we do with e-commerce customers, and can shake up the entire sales team. Let’s look at some of the ways e-commerce growth impacts the rest of the sales team.
Building a sales team: New pressures for existing customers
Not surprisingly, as e-commerce grows, offline retailers come under pressure. And that, unfortunately puts pressure back onto the manufacturer. Trade term agreements, forged in the belief that big retailers will continue to grow, are often not fit for purpose in a world where the biggest customers stumble. As some shoppers start switching out of offline stores, new ways of working are required. Continuing to invest in offline retailers in the same way as in the past will hit profits. Combine this with the need to invest in fast-growing online channels, and the pressure on trade spend budgets soon becomes unbearable. Strategic trade investment decisions need to made across the entire customer base, not just looking at an off-line or on-line customer set.
A power shift in your current customers
Best practice key account management has always advocated that it is important to have multiple contacts in the customer organization. Unfortunately, too many key account managers still focus heavily on one key contact. One of the trends we’ve observed is that as online and e-commerce become important to an offline retailer, their marketing team seems to wield more power. If you’re not networked into the retailer’s marketing team already, now is the time to start!
Building a sales team to cope with rapid decisions
ECommerce speeds up business. Prices change on a daily, or hourly basis for example. Online retailers want fast responses. Annual promotional plans often prove far to cumbersome. Decisions that could wait for a weekly or monthly meeting with the boss need to be made much faster. Building a sales team that can act fast, but stay on strategy is critical. Policy and procedures are required to enable effective decision making: authority (and authority limits) need to be set and managed.
3rd party wholesalers and distributors come under intense pressure
One of the other unexpected consequences is that existing distribution models come under pressure. In many markets manufacturers service huge quantities of small stores across the world through networks of distributors. These distributors are key to maintaining availability across the country, and typically operate on thin margins. What happens when e-commerce companies start selling to retailers? On the surface, there isn’t a problem because shoppers can still get your brand. But the problem is that the distributors profitability dives. Let’s say a distributor services a thousand outlets. What happens when 200 of those start buying online? The distributor is no longer profitable – and your stand to lose 800 points of distribution, or to invest heavily to prop up the distributor’s bottom line. Far fetched? Its already happening in many parts of the world: in both India and China online retail giants are actively marketing to small store owners. Building a sales team for the future must consider the impact on all aspects of the sales team, not just the obvious areas.
At its core the trends we are seeing in retail aren’t simply about e-commerce. This is about shoppers. Shopper behavior is changing dramatically and that is putting enormous pressure on the businesses involved – both retailers and manufacturers. Sales leaders must begin building a sales team which is fit to respond to the opportunities and threats that changes in shopping behavior are bringing. To learn a little more about how shopping behavior is changing, and how that might impact your business, sign up for Shopper Marketing Experts.