How to make online profitable
This document shares the basis of online home, the financial implications of transactions moving to online, and a translation towards a profitable future
eCommerce sales within DIY and furniture retail has evolved over the last years. A profitable online business is challenging due to three key industry characteristics
1. Increasing competition in the marketplace, online and offline
2. Extreme diverse characteristics in product portfolio
3. Margin dillutive home delivery
Online was relevant pre-covid, but will play an even more prominent role in the future. It is key to mature online towards a more customer engaging but profitable channel.
DIY e-commerce E-commerce adoption for DIY has peaked during the lockdown period. Even though it remains uncertain how e-commerce rates will evolve, a more important role for online is still expected
- Government interventions have forced overnight changes in behavior
- Post-pandemic behavior is driven by what consumers want, not what government mandates
- Key question for business: “will we go back to normal or can we benefit from a “new normal”?
- Stickiness of behavior is primarily driven by whether the new experience is better than the old one
"With the knowledge that online will become more prominent and the assumption that ignoring this is not an option, for the vast majority of retailers, the question then becomes how to minimise the margin impact of an expensive e-Commerce channel without jeopardizing on customer experience.”
Provide an insight in the home industry, including competitor landscape, the assortment complexity, and corresponding segment trends
Share baseline cost structures for store & online transactions and deep dive on key profit drivers that lie underneath the online paradox to understand the key issues of different fulfilment options
Share solution directions that can help to turn The Online Paradox into a profitable online business model