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Another big step for eCommerce

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Alexander Graham Bell said that when one door closes, another opens, and this is true of the current times – the Covid-19 shutdown has brought conventional retail to a juddering halt but has injected further energy into the rise of eCommerce.

A case in point is Facebook’s recent push to secure its position as a key platform provider for online retail. Not only is Facebook launching Facebook Shops, but it is catching the eye of its target market with a $100m pot of cash that will be distributed to 30,000 small businesses in 30 countries.

In his 19 May 2020 video conversation with Shopify CEO Toby Lütke, Mark Zuckerberg describes how this initiative is part of a concerted drive to build the eCommerce infrastructure and the associated ecosystem.

As described by Mark and Toby, in the last few years there has been an explosion in the efforts of small businesses to build brand presence online and some small businesses with a great product, level of service and marketing ability have grown a strong direct-to-consumer (D2C) market.

This is incredibly valuable because:

  • Business which own the primary consumer interface for selling their products have more opportunity to maintain and build customer relationships; they can secure repeat business or immediately access a sizeable customer base for a new product.
  • If they can manage the supply chain and logistics wisely, the margins from selling D2C are higher than from selling to wholesalers B2B.

Shopify has often described its service as a democratiser, and there is substance to this. Using an eCommerce platform such as theirs can dramatically empower the small businesses whose presence would otherwise be diluted when working through a marketplace such as Amazon (although even here the fight for visibility is fierce and demanding).

There are complexities when managing inventory and logistics, but within the complexity there is opportunity.

For example, the immediate knowledge of how consumers respond to a new product gives real time information that can be used to manage inventory, for example businesses can generate cash by running discount sales on older stock.. Management of the sales pipeline can also provide scope for alternative financing methods such as invoice financing (more for B2B) and up-revenue-based financing (also for D2C sales)..

This is part of the value chain where skill can be a true source of competitive advantage, and this is an area in which we provide support. There is also scope for technology to make a big impact here, and as described in a previous blog we developed an app, Autixor, for automatically processing Shopify sales orders into the Exact Online ERP system.

In short, eCommerce is a field which is expanding faster than ever before and Facebook’s renewed focus on this market will accelerate it even further. For small businesses with the right approach and support this is a golden opportunity to do well. We look forward to being part of the process.