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Since the onset of the pandemic we've been reconnecting with e-Commerce industry leaders to find out how a diverse range of businesses are weathering the storm and adapting to the challenging new retail environment.
We recently spoke with Paul Postance, former Interim Director of E-commerce Transformation at Virgin Media, to find out his thoughts on how SMEs can respond to the changing consumer behaviour we’re seeing in the wake of the crisis.
We also wanted to hear his perspective on what SMEs should be doing right now in order to capitalise on the opportunities that online presents, and if there are any lessons they can learn from huge corporations, like Virgin Media, who are ahead of the curve when it comes to digital transformation.
What did your role at Virgin Media entail?
Someone in my personal network approached me with an intriguing proposition that was very open-ended: Virgin Media was looking for someone to lead a transformation project in an agile and dynamic manner. The approach was interesting and different from other transformations I’ve seen, it was more akin to that of a challenger brand rather than that of a huge provider with multi-million pound budgets and five-step waterfall methodologies.
In essence it was doing something very simple like split testing: putting out version A and version B, at the same time, measuring the results and using them to make the next decision. I built up a team, put a proposition in place, laid the foundations and then COVID hit.
How would you describe the changes in market conditions you’ve witnessed in the past six months?
I’ve spent over 20 years working in e-Commerce and digital roles and I’ve never seen anything like what’s happening today. No one has! The COVID effect has completely turned everything upside down, which has meant that many businesses have had to quickly adapt to the new world. They’ve had to learn and understand so much more about their customers’ needs and desires, and how to communicate with them.
SMEs in particular have been on the back foot trying to pivot to get the technical knowledge and expertise they need, all the while their revenue has plummeted and cash flow is likely to be the most stretched it’s ever been.
Being at a telco during this period was great as communication and entertainment became critical for people’s lives, whereas it wasn’t necessarily quite so important previously. We went from a fairly standard market which was saturated, to one where suddenly demand was huge and it became increasingly important to satisfying customer queries and support an increased volume.
Where can SMEs start when it comes to digital transformation?
What’s going to happen to the high street is a really hot topic at the moment. Some businesses like Virgin have shut their stores completely, so there are no physical spaces anymore and this channel no longer exists.
The main focus for SMEs should be to rapidly create a direct-to-consumer channel and build out their websites. It will come down to scale and infrastructure, and building something on their own platforms. They should look to maximise the fulfilment and distribution channels they have, using platforms like Amazon, eBay and Etsy where necessary, to rapidly scale up.
Improving communication and building relationships with customers is crucial. For Virgin Media, the “help me choose” section of the site led to a high level of conversions, and was a game changer. But it’s not only about the point of contact, but the end-to-end supply chain as well. The back-end needs to be structured to work just as well as the front-end, and there can’t be massive gaps. For SMEs to adapt post-COVID the answer is always going to be digital.
What are the areas of digital transformation businesses get bogged down in and typically waste time on?
Implementation is a big one as well as the costs of IT providers and waterfall style project delivery. COVID has forced changes to happen that people previously thought were impossible, whether that’s because they were deemed too long, too hard or too difficult. The necessity of working from home has caused a big shift. In evolutionary terms, businesses have had to adapt or die, especially in the retail sector.
There are no barriers to entry for anyone to have an online presence – it’s easier than ever to build a direct-to-consumer channel, and platforms like Amazon and eBay are the biggest winners of the crisis, and also Google. SMEs should be failing faster: embracing the speed of trialling something and discovering it doesn’t work quickly, as that will inform the next decision which will more likely lead to an outcome that does work.
Are there any brands that you think haven’t adapted fast enough?
Primark is an interesting case. The retailer earned £0 in sales during lockdown. Not having a transactional website cost Primark around £650 million for every month that all stores were closed, totalling around £1.9 billion, yet it still refuses to adapt. Primark is missing an opportunity: it’s not just that because its products are cheap that returns won’t work. Not everything they sell is cheap, so they could introduce a tiered process with rules around what products are returnable, be clear in their communications to customers and make bold decisions. This is a really good time for digital disruption!
Retailers need to be smart about how they present their products. We’re seeing lots of clothing brands moving online and only displaying flat lay images of their products, which means consumers have no idea what they look like on a real person which decreases the conversion rate and increases the likelihood of returns. The generic approach of some SMEs to get stuff up online fast is damaging in the long-term because they’re not really understanding the needs of consumers.
I worked with Shop Direct when it was the UK’s largest online retailer around 2010-12, and a key focus of the business was on reducing the level of returns. We did a lot of work to guide people, using reviews and user-generated content to help consumers purchase with confidence.
For any digital transformation to be successful there has to be a digital-first approach, embedded and understood throughout the business. Buy-in has to come from the board and the most senior leaders in order for the shared vision to be executed in a coordinated and agile way.
We’ve seen some strong brands get into trouble recently, like Cath Kidston and J. Crew, and it shows that no matter how big a business is it can still just disappear if it goes down the wrong path. There can be a lot of complacency in big organisations – whether it’s that the structure isn’t digital first, there are conflicting agendas or other internal reasons – these are the types of things that can subsequently lead to collapses.
What would you say to any SMEs still resistant to change?
I would suggest that they do some introspection and evaluate what they want the future to look like! If they’re choosing a purposeful denial of reality and what’s going on, which is undoubtedly uncomfortable, they can prepare to fail.
Instead I would recommend they pivot what they’re offering, or how they’re engaging customers. Meeting customers online, sharing knowledge and offering things for free, are great ways to increase engagement and build social equity. Ultimately business owners need to change their mindset in order to reap the benefits later on.
What technology should SMEs invest in?
There’s a lot going on in the automation space through AI and there are some really good opportunities for SMEs to increase efficiencies and reduce costs. On the engagement metrics side, there are lots of things you can do with web chat, for example. Chatbots are the new kid on the block, they offer services which are cost-effective and provide automated interactions for consumers. They’re increasingly sophisticated and offer economies of scale, meaning you need less customer service agents, and therefore the cost to serve goes down.
An overall strategic approach would be the scaling of cost and benefit that surrounds everything you need to operate online like analytics, CMS, design, UI, UX, SEO - all of these things can be done for virtually nothing or free, scaling up to enterprise level where you’re paying millions of pounds for things like dedicated hosting and dedicated products and services.
Take Google Analytics for example. It’s free and you can use it to do split traffic testing, which is really important but only useful if you have enough traffic to begin with. You need to ensure you’re generating a strong flow of traffic before you can work out how to manipulate it. Technology should be used to help SMEs move away from opinion-based decisions, it should enable you to experiment and ultimately result in innovation-led outcomes.
For any SME there will be basic building blocks that you need to put in place to ensure your channel’s fit for purpose. Site search is imperative, but it still amazes me how many businesses don’t have it. In this day and age there really isn’t any excuse. If you can’t learn it yourself or build in-house capabilities right away, you’ve got to stop wasting valuable time and investigate collaborative working with a third-party who can provide ongoing support. On the PPC side of things, SMEs should invest in a competitive intelligence platform that can help increase online visibility and optimise Google campaigns or look to outsource this vital function also.
As we’ve learned from Paul, digital transformation doesn’t have to be overly complicated, and there are lots of small things you can do to push the needle without significant investment. Bringing in specialists who can provide everything from tactical support to strategic advice can help you embed new technologies in your business and reach more customers, ensuring you’re well positioned to capitalise on the market opportunities that COVID has presented.
Every business should have access to online marketing that works, and by partnering up with 3-commerce, that’s exactly what you’ll have. Give us a call on 0333 772 9369 to find out how this can work for you.