What challenges do multi-national firms face when it comes to eCommerce?

What challenges do multi-national firms face when it comes to eCommerce?

Most manufacturing and marketing companies are not retailers themselves. They depend on distributors who in turn depend on retailers to sell products to end consumers.
When it comes to eCommerce, the challenges for multinational firms are several

Some of the questions are:

  1. Do we set up our own branded online stores in the countries where we operate?
  2. If we do operate an online store under our own brand, who will operate it?
  3. Will we divert our digital marketing dollars from the website to the webstore?
  4. If we spend money driving traffic to our webstore , will we expect an ROI from such an investment?
  5. How do we engage with marketplaces such as Alibaba, Amazon and Flipkart?
  6. How do we deal with the potential channel conflict between ecommerce and brick and mortar? Especially if we, the brand, are seen as operating in the ecommerce market?
  7. Who will be responsible for ecommerce within the organisation?
  8. How do we justify a special team of employees focussed on ecommerce?
  9. Will an internal ecommerce team attract the best talent or will we be compromising just because we want to have an internal team?
  10. Who carries all the responsibilities that go with direct to consumer – legal, payments, and customer service?

There are several other operating level challenges that come with running in an ecommerce business, more so if it is across countries.

My recommendation to companies about ecommerce – treat it like a channel and deal with it as a channel. In other words, don’t run the channel. Just supply your products to it and support the channel to enable it to grow. In other words, don’t get into ecommerce (yourself) as a multinational company. At best have a central function with one or two headcount that are responsible for ecommerce. Task the team to find appropriate channel partners in each country. These channel partners could be appointed for one or more of the following:

  1. Set up and operate the company brand store under license from the brand
  2. Be the official seller of original products on the marketplaces operating in the country
  3. Represent the brand as the B2B ecommerce partner
  4. Be the Omni-Channel fulfillment partner where the brand has an Omni-Channel play

The in house ecommerce management team at the multinational firm should be focussed on

  1. Creating an ecommerce strategy for each country. This includes deciding whether the play is going to be one of a brand online store or marketplace or B2B or Omni-Channel or one or more of these
  2. Identifying the appropriate channel partners in each country
  3. Identifying the appropriate technology for each channel partner
  4. Setting up the partnerships, product supply and customer service standards
  5. Creating reporting and analytics dashboards
  6. Providing merchandising and marketing support
  7. Managing the channel relationships

In Summary:

There are a lot of questions to be answered before any multinational firm decides to get into ecommerce in multiple countries. Given the rules and processes that most multinational firms have, they need to question if they really have the flexibility, nimbleness and risk taking ability that is required to be in the ecommerce business

I have worked in multinational firms for over a decade as an employee and fifteen years as a vendor. Most multinational firms are great at processes, systems and rules. And they have to be. With the brand operating in so many countries the only way to manage is through processes and rules.

My recommendation is for the company to not be involved in the actual ecommerce and to outsource this to appropriate channel partners

Channel partners are not existing retailers and distributors but new age and focussed echannel partners like ND Commerce (www.ndslindia.com) or Tiger Pug (www.tigerpug.com) who will work with the brand to deliver the end results. Such channel partners can not only run the brand online store but also represent the brand on online markeplaces.

The company and brand team should be focussed on the 7 points highlighted above

Lastly, ecommerce is not a magic pill. It will take time and like any other channel, will need to be nurtured and developed and continuously improved upon.

Therefore it is important for the brand and company to have a long-term view and invest in a lean in-house team that can work with various outsourced channel partners to make its eCommerce plans a success.

Author :  Ajay Miglani
email : ajay@tigerpug.com
Phone : + 65 83886673