January 28, 2023

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Retail: Power of e-commerce takes the stage

Retail has a lot of descriptions but briefly, we can define it as bringing products to the consumer uninterrupted and reliably for all time. No matter how simple it may seem by definition, it has a complex structure in which more than one company has duties and responsibilities in terms of the operation and delivery of products to consumers. Retail, which is a very competitive sector, always has to renew and develop itself according to the habits of consumers when we look at the market and demand.

When we look at the historical development of retail, which can be said to have started with barter, it is expected to reach $27.33 trillion by the end of 2022. This figure is equal to the gross national product (GNP) of the United States. The following country is China and its GNP is around $20 trillion. This shows us how big the retail sector is globally. It is an area that grows and develops the global economy by working together not only with companies that sell to the end user but also in many sectors from production to logistics.

Over 20% of total trade on online markets

When we look at the current situation, we see that some habits on the retail side have changed during the pandemic. Consumers preferred the online side, which turned over 20% of the total trade revenue into online shopping. Companies that did not have enough human resources and technology before, fell behind in this competition after a while. At this stage, online marketplaces come to the fore and the budget they spent and the customer data they had, were larger than the data of many companies in the retail sector so they could reach more customers and sell cheaper than many other companies.

When we look at the situation here, as of 2021, the e-commerce turnover in our country is TL 234 billion ($12.5 billion) and according to estimates, two-thirds of this revenue is realized through online marketplaces. The more interesting thing is that over 484,000 companies sell products via e-commerce, this situation shows us how widely online marketplaces are used all over the country.

There are two conclusions to be drawn from here:

Demand is quite high and consumers’ primary purchasing tendency is to buy online, and the numbers clearly reflect this. Almost one-fifth of the trade in the entire country takes place online.

The fact that so many companies (around 484,000) sell products in this channel shows how tough the competition is and that companies have to develop alternative sales policies to reduce their costs.

How sustainable is online selling?

So, do the marketplaces that grow in terms of revenue really give an advantage to companies? Faced with such a situation, which has now become one of the constraints in question, we can list the main consumer agendas as follows:

Marketplaces only provide price-based competition. How sustainable is this?

Customer data only belongs to the marketplaces. How sustainable is a sale under these circumstances?

Marketplaces can also seek the data of wholesales, coming from the marketplaces, and they decide the products to be sold the most using this data.

Closing or suspending the store is always on the top shelf of companies. The suspension is not defined by the regulation of the marketplace therefore there is no compliance rules set against the company. There will be regulations by the government, yet not published.

Although the answers to these questions vary from company to company, the process followed by many companies is almost the same. In this process, companies that learn e-commerce establish their own B2C structures as a solution. Both because they learn the business from the marketplace places and the human resources professionals support them in every operation they need. When we look at the benefits of the B2B and/or B2C stores:

Price competition is getting less important if you have B2B / B2C stores as companies do not need to compete with opponents in their own stores. The increase in customers leads to a decrease in sales costs for companies. Therefore, companies are getting more and more profit from their online stores. By combining e-commerce with their offline store system (Omnichannel), it is possible to provide customers with both offline and online service with par excellence.

The most important gain is the revenue of the B2B side has reached five-times more than B2C, and retailers can increase both their revenue and their customers by making many sales in this area and in B2B, since B2B shoppers have much higher shopping cart average.

When we look at all this information, expecting that retail revenue will be $27.33 trillion in 2022, competition and technology are at the highest level in such an intense market. It is seen today that retail companies that deepen their competitive strategies with the support of technology and that can set up B2B / B2C processes correctly will be the ones who will get the most share from this process.

In addition, companies used their other processes online because of this intense competition. And customers have easy access to all major companies via the internet. While product prices were mostly fixed, B2B companies moved their dealer, sub-dealer and franchise management systems to completely online infrastructures in order to reduce prevalence and costs.

So, productivity has increased. Having a glance at the current situation, the systems worked not only as B2B or infrastructure but also directly as decision support systems and act as process management systems and business intelligence solutions. As a result, infrastructure companies get some rare benefits.

By defining special prices and campaigns for customers, they both increased their revenue and their profitability because of the special definitions. Companies have updated their infrastructures and their workflows accordingly leading to an increase in their efficiency. Unlike previously, customer- and dealer-based selling, target option setting and instant tracking of the target in business have become quite easy at the moment.

Most companies still use salespeople for their dealing and franchise sales. With the systems designed for the management of these processes, route planning is made for each seller, and the Customer Relationship Management (CRM) within this infrastructure, sellers and customers can record every moment of uninterrupted communication making it more effective and efficient, plus a manageable sales network.

As it is known, the payment process is also online, so dealers and customers can pay and receive payments 24/7 not only via the web but also through SMS and email.

Companies in the management of growing structures and in decision-making processes use lots of innovations, which ensures that companies’ classical retail sales grow and evolve with technology.

*CEO of Projesoft Information Services and spokesperson of the E-Commerce Infrastructure Providers Association (EDER)

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