Define a post-pandemic channel strategy

As consumers have sheltered at home during the pandemic, greater economic activity has moved online. “In many markets, the rise of e-commerce has compressed years’ worth of growth into just a few months,” McKinsey noted in a report in August 2020.

Now, with ongoing vaccinations, CEOs and others allocating resources are faced with a question: is the rise in online shopping in the pandemic era a standstill or a significant shift and standing? Across all sectors, forecasts aimed at answering this question will form the basis of billion-dollar bets.

Predicting the future is difficult, but it can be broken down into management-relevant chunks that help separate the knowable from the unknowable.

First, ask yourself if the past is a prologue. E-commerce is not new. Books.com sold online when Jeff Bezos was still working on Wall Street. And even after decades largely free of sales taxes, e-commerce only accounted for 11.4% of U.S. retail sales in 2019, a steady but very slow increase from 5% a decade earlier. In the second quarter of 2020 (peak US lockdown conditions so far), online retail sales were 16.1%, a gain of less than 5%, and fell to 14% in the fourth trimester.

In fact, a pre-pandemic retail trend was the opening of physical stores by once pure e-commerce companies like Birchbox, Bonobos, Warby Parker, Wayfair, Amazon and Alibaba (in China), among others. As businesses grapple with increasingly sophisticated online ad blockers and tighter regulatory controls over consumer data, it’s unclear how much shopping will be online in the future – and whether social distancing makes people more ready to transact online or demonstrates the limits of buying, selling and communicating virtually.

Second, recognize that predictions about technology are often overstated. In the 1930s, when telephone service became widespread in the United States, the press predicted the “death of the middleman” (now called “disintermediation”) because we could communicate by telephone (“virtual selling”) . In the 1950s, when the National Highway System was built, experts predicted the demise of retailers because people could drive to get better prices from wholesalers. In the 1990s, a similar prediction was common about the “information highway”. None of these predictions came true. The analogies to current predictions aren’t perfect but, as Mark Twain said of history, they rhyme. “A major pandemic has great effects,” notes historian Stephen Davies in his book Going Viral: The History and Economics of Pandemics. “What it doesn’t do is introduce something really new. On the contrary, it accelerates and amplifies trends and processes that were already underway. »

Third, what is is shifting to omnichannel buying, and this has implications as managers allocate resources in order to achieve profitable growth.

Observers who view the online and physical worlds as “either/or” have generally been wrong. In 2019, more than 1.2 billion movie tickets were sold in the United States, about as many as five years earlier. Average ticket prices increased by 12% during this period, despite the growing availability of home movies via streaming services. Between 2009 and 2018, independent bookstores in the United States grew by 49% (from 1,651 to 2,470), despite Amazon. Even within digital channels, sellers use multiple platforms. In 2019, nearly 60% of merchants in the U.S. Amazon marketplace also sold on eBay; 47% also sold on their own sites; and around two-thirds (66%) also sold in physical stores. Amazon itself is a reseller in many categories, a platform for businesses in other categories, a reseller and marketplace in still other categories, and opens stores. Online and offline are more often complements, not substitutes, as customers tap into multiple sources of information across and across distribution channels for products and services.

So, adapting to the future, beware of channel inertia. As the pandemic subsides and consumers face fewer restrictions, now is a good time to assess your options and the following factors for allocating resources between options:

Online/offline interactions.

Shoppers who pick up online orders in-store spend more — up to 25% more according to some studies. Approximately one-third of clothing ordered online is returned compared to 8% purchased in-store, and processing an in-store return is half of what it costs when an online order is returned to a fulfillment center. According to research firm Body Labs, customers who try on clothes in an in-store fitting room are almost 7 times more likely to buy than those who search the web. Before the pandemic, nearly 25% of U.S. apparel shoppers visited Amazon early in their shopping journey, but most of those visitors shopped elsewhere. This suggests that online channels are important for research and product discovery in these categories, but less so for specific product reviews and the purchase itself.

Online/offline interactions have even greater economic impacts in B2B marketplaces, where global e-commerce transactions are valued six times more than in B2C and where sites like PowerReviews and Marketo’s Marketing Nation provide B2B prospects customers’ opinions and experiences of use during their buying journey. In these situations, distinguish between what you sell and how customers buy and the implications for choosing distribution partners. In many B2B categories, you can sell the same product to multiple segments, but each customer buys separately. Therefore, the adoption criteria differ depending on the channel through which it is sold and serviced.

In product categories where resellers, outside sales reps, or other partners are involved in making the sale, clarify the role of a partner in your strategy. Is it mainly a question of profitability: this partner can perform important tasks at a lower cost than you? Or is it market access: a partner gives access to certain sectors or decision-makers at the customers? Or are partners essential to the solution that customers buy: they provide the necessary complements to the product that you sell? These roles have different implications for channel design and management. Distinguish between “selling” partners who deal with the same buyers as your customers and “selling” partners who fill a gap in your product or service offering.

Tools and training.

Most companies’ market planning and sales training focuses on the product or platform and ignores their company’s ecosystem. One estimate, for example, is that for every dollar a company spends on its SaaS platform, it spends four times that amount with systems integrators and other channel partners. And as technologies are integrated with other products, services and solutions, effective selling requires more partners. Salesforce, for example, recruits thousands of new partners, while Microsoft reportedly adds over 7,000 partners every month.

At the same time, new software tools can enable you and your partners to leverage content, messaging, and demand generation insights. Multi-channel selling is complicated but necessary. Trying to do this without clever use of these tools makes it unnecessarily complicated and tedious.

Additionally, especially in B2B markets, it is typically sales people who play a key role in the ongoing interactions with channel partners and users. But when salespeople work with partners, their tasks change. On the one hand, individual contributors now have management and sales responsibilities. Channel management suffers unless you are proactive in your hiring and training initiatives.

The future is never what it was. This now involves rivalry between channel systems, not just between individual companies. Competing with Amazon means competing with that supply and distribution chain, not just price and product on a website. In any industry, effective sales isn’t just about listening to customers and delivering value. This requires the intersection of business and channel capabilities with customers throughout their buying journeys.

Tanya J. Hill