This time at eCommerce Talks, we host Martin Himmel, a consultant, and Managing Partner at ECOM Consulting GmBH, to talk about digital transformations, their major blockers, and companies that failed in the transition from the offline to online worlds.
What are the reasons for failure in converting a business to digital commerce? What criteria should we take into account while selecting eCommerce solutions? Is it just about technological transformation? Or maybe we should focus on people and processes within the company? How deep and profound should the transformation be? What is the point from which you cannot turn back?
Look for the answers and examples of companies that failed, as well as those that succeeded and mastered their digital journey to perfection in this episode of eCommerce talks.
Watch the full episode or dive into our transcription of the talk.
eCommerce Talks – video:
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eCommerce Talks – transcription:
Marcos Bravo C.: We have a special episode today and a very special guest. We’re going to talk about something we don’t usually talk about, which is about little bit more of failures. We’ve been talking about a lot of successful companies and successful experiences and for that, today we have Martin Himmel, who is the founder and managing director of ECOM Consulting. Thank you Martin for joining us today!
Martin Himmel: Thank you for having me.
– Martin, you are easily an expert on eCommerce and retail, online, offline, you know what’s going on in the world. We wanna focus this time on why companies are not making it, on why companies are investing a lot of money into trying to transform themselves and transform their eCommerce platforms and it’s not working. What could be the main reasons?
– You know, there are a lot of reasons to be honest. One of the biggest reasons and something that is often left behind is the culture. As Peter F. Drucker said, culture eats strategy for breakfast, which is absolutely true. Especially in the digital world, which is very, very fast-moving. So, often it’s the marketing department launching, I don’t know, some kind of eCommerce focused approach, or strategy, or whatsoever, completely leaving out the rest of the company, and this has some really severe issues. Let’s say it’s people asking: “hey, what about my sales commission”, if you’re talking about B2B for example, or people that have the feeling to be really left behind because communication is not happening. All this information, internally, is not going around abd people are not knowing what is going on at the moment, how is the company really transforming. That’s really one of the biggest blocks why such things fail – it’s really the culture. On the other hand, it’s often also regarding the processes because often systems are implemented, but the processes are completely left behind. When marketing for example, introduces some kind of PIM system (Product Information Management system), but nobody is talking about where does all this information come from, who is responsible for creating or updating product information. You don’t have the current information in for example, a shop, or app, or CRM, or whatsoever. It’s often about getting the processes right, and really having a more process-oriented form of working, not department by department, because if you’re talking about digital sales it’s about product life cycle, it’s about customers life cycle, it’s about order life cycles, it’s not one department that is handling for example all the product information. Of course it’s the researchers, it’s the product managers, it’s the purchase department, it’s a sales department, it’s a marketing department.
– It’s like complete transformation
– Yeah, absolutely.
– We talked with a lot of people that we always think of this just a tech transformation.
– And it’s not.
– It’s so much more.
– Yeah. It’s like the iceberg metaphor. It’s what happens above the surface is the system’s. What is below the surface is much, much more important. It’s about information, it’s about processes, it’s about getting people really on board, and explained, and that eCommerce digital business will not harm them, but support them in the daily business.
If you think about a salesperson for example, who has a far easier job if it’s supported by the proper CRM software, or sales automation software, or giving the customer the possibility to order for example late at night. If you talk about self-employeds instead of having to call a salesperson. Combining those things that’s the key. Getting people on board and getting people to understand that it’s a support, it’s not a threat, but it’s really support in my daily business, this is when it’s really successful. Often this is forgotten and left behind. This is when you have barriers inside the company, when technically everything is okay, everything is fine, everything’s perfect: the system is right, the agency has done a good job, but if you leave behind the culture and processes, it will be really hard on daily business.
– For sure failure.
– Yeah, absolutely.
– When is the time that companies come, is it usually when the companies are desperate because something went wrong or they’re smart enough to come in a very early stage?
– It depends. Often a digital transformation also starts for companies that are looking for a specific system, or seem to have made up their mind what they really need, but often they don’t. It’s our task to make them rethink their decision, or make them think for whatever reason they need a system. Often it’s not the system that they need but the strategy or thought about culture and process as explained. In an ideal world, they come to us when they’ve realized that they cannot make this decision alone, and they don’t realize how deep and profound this transformation is. On the other hand there are a lot of companies really coming when it’s already gone wrong, they’ve introduced a wrong solution…
– … and try to fix it.
– Make some magic happen, so to say.
– Have you ever faced a company that made so many bad decisions that you guys just couldn’t help? I’m thinking about companies that they feel: “oh my God we’re so screwed”.
– Yeah. Often they don’t realize that there are services available, like our company is providing, that really can help on those ways and those decisions. If they do, there’s always a possibility to help and often it’s about talking to people, and really also asking what could go better from your perspective, from your opinion. This is always the first step, to really approach a profound change and make people understand WHY things are done. Make people understand the reason behind introducing a new system, not to have additional work, but to have a better customer experience, work more efficient, and so on. There’s always the possibility to really help or provide help.
– That’s cool. I want to go a little more technical. We’re living in a world where PWAs’ and microservices’ offer for eCommerce is just massive. What are the tools that you really see thriving? What are the tools that are really gonna stick around?
– What you often experience, when it comes to companies wanting to realize eCommerce strategies, is that they have some kind of ERP, which is good, and which also the IT department is used to living in, and thinking in, and to centralize information, which is basically good, but often it’s not possible for an ERP to realize a retail or B2B strategy. If you’ve ever done B2B before right, because the customer journey is different, people ask other questions, people need other information, people who sent goods back want a refund, use different payment methods, and so on, often ERP systems come to an end. ERP systems are not built for a fast-moving digital world. It’s very important to have something that is helping you to get along with this rapid transformation, because marketplaces are evolving, marketplaces are closing down, you want to achieve or want to reach out for different customer groups for example, on different channels, and often you have this fast-moving world and this brick which is called an SAP, or is called Microsoft Dynamics. This is really what companies are struggling with and this is something you can solve not by inventing an online shop, because an online shop is representing your goods or making turnover, making sales possible as easily as possible for the customer. This is only a sales window but all this process logic that is needed for eCommerce is quite different from this traditional work that a lot of manufacturers, or retailers are still living in. This is why this step online is, from a technical perspective, so massively hard for a lot of companies that we work with. There are tools, like auto management systems, process automation systems for example, that can really help, commerce tools, where you can build frontends upon, or have tools like Frontastic, or Vue Storefront, or PWA, that really make it possible to have very flexible, customizable and easily adjustable frontends without having to plan with the agency, for 20 to 30 days, but simply building up a landing page for a specific campaign and to connect this with the ERP on the other hand, which can work in the way it’s used to. It has been working for 10 to 20 years with the default processes, so it doesn’t matter where a sale is coming from, if it’s from offline or online, the processes are basically the same but this connection thing, that is one of the key success factors, I would say.
– If you’re in the consulting side you know that some people listen, some people don’t.
– That’s true.
– Could you choose two examples of companies that listen to not just you guys, but to the ecosystem, and the companies that didn’t and lost. What would be a good example of the companies that are doing great and of companies that they’re not?
– Companies that are doing great, is like if you think about OTTO for example in Germany, they have sub-companies like ABOUT YOU, but also other companies, online pure players in their universe and simply let them do their business, let them make whatever is good, whatever is helping to master this digital journey. What they’ve realized is that there’s a big growing traditional culture on the one hand, in the mother so to say, but this digital world is so rapidly changing that we need to have bridges built between one another. This is not realizable in the big traditional company, right, so that’s one way of listening or a good example that you have in Germany of companies that are really listening.
On the other hand, there’s one of our customers, he’s in the in the fashion business, a traditional manufacturer, always selling to stores, selling to wholesale, where you have both the stores and the wholesale declining. That’s a company who really try to understand the customer by doing direct business, direct sales and the result is that they’re growing online by 90% year on year. The other thing is that offline is really profiting from the online activities because the retail business is rising again, the wholesale business is rising again, because the demand is higher, because the brand awareness, because of those online activities out of understanding the customers and learning the right lessons, is increasing. That’s really really an amazing example.
– That sound an optimistic view too, they’re some positive that companies actually may be finally listening to the customers before they make decisions, which is probably one of the wisest things to do.
– Retail is always about listening to the customer and getting along with trends and demand in general. There are so many examples of big companies, also in Germany, like Neckerman who didn’t listen, who finally went bankrupt, who also discovered at a later stage that their ERP is too old and too inflexible to get along with the digital world.
– Martin, to close our failure chat, and actually more than failure it was more of an optimistic chat after all, if you have to recommend a podcast and a book that could help people to get to where they want to be – what it would be?
– It’s really a hard question. In Germany we have two really good podcasts. It’s “Exciting commerce” on the one hand, and on the other hand KassenZone by Alexander Graf, which are always a source of also critical views on what is happening in retail. It’s Roman Zenner’s Shop Tech Blog which is always worth listening or reading because you get a lot of views and interviews also on trends in commerce.
– It was a pleasure for us to have your here. Thank you Martin.
– Thank you for having me.
Podcasts recommended by Martin Himmel:
- Exciting Commerce by Jochen Krisch and Marcel Weiß – https://podcasts.apple.com/de/podcast/exchanges-by-exciting-commerce-e-commerce-digitalisierung/
- Kassenzone by Alexander Graf – https://www.kassenzone.de/
- ShopTech Blog by Roman Zenner – https://shoptechblog.de/about/roman-zenner/