Fulfillment costs: How to measure and reduce them in e-commerce?

Whether you decide to handle it yourself or outsource it, e-commerce fulfillment has a cost. A cost that you obviously try to keep as low as possible, while maintaining your attractiveness at its highest level to attract more potential buyers.

In this article, we'll take a look at the main factors impacting your logistics costs, along with our tips for reducing your logistics budget without cutting quality!

What are fulfillment costs?

Fulfillment costs, or logistics costs, are all the expenses incurred by a company in managing its products, such as storage, order preparation and delivery.

These costs are crucial to a company's overall strategy, as they directly affect customer satisfaction, market competitiveness and profitability. However, they represent a major expense item, especially for e-commerce companies, estimated at around 11% of a company's sales.

What are the logistics costs involved in e-commerce?

Goods storage, order preparation, parcel dispatch... Find out below about the main costs to consider, whether you manage all these factors in-house or via a logistics provider:

1. Fulfillment costs for product storage

It's generally one of the highest costs in any sector.

Depending on the quantity of merchandise in your possession, you'll need to find the right warehouse, manage its routing, reception and shelving. Warehousing costs include :

• Rental or depreciation of storage space (if you rent or own)
• Maintenance of the site and the equipment it requires
• Insurance to protect your products from accidents that may occur on the storage site

In addition, there may be other costs, such as taxes on the space or warehouse management software.

All these logistics costs vary according to warehouse location, capacity in m3 and storage time.

2. Order-picking fulfillment costs

Your logistics costs include those associated with order preparation. These include :

• item picking - also known as "picking" - and
• sorting according to destination
• packaging
• pre-shipment inspection of your products.

This preparation is a key stage in logistics, as it has a direct impact on service quality and speed.

3. Transport fulfillment costs

Another point that can have an impact on your budget and the selling price of your goods is the cost of transporting them.

The faster your transport, the higher the price, and this can have an impact on the delivery costs of your products.

Delivery is one of the factors most closely watched by consumers. Reducing delivery times as much as possible is a key challenge for boosting your business.

4. Fulfillment costs linked to customer service

Product lost, damaged during shipment, not conforming to the advertisement, management of customer returns... The more you sell, the greater the risk of imponderables. That's why it's essential to provide quality after-sales service. Quality comes at a cost, which is sometimes difficult to reduce without losing efficiency and responsiveness.

5. Insurance

Insurance is essential for all retailers and e-merchants, to protect your merchandise in the event of theft, breakage or loss.

 

How much does your logistics cost?

Are you spending too much on logistics?

According to a study conducted by Supply Chain 24/7, the average logistics cost for a company is estimated at 11% of sales. This estimate is growing every year, due to the ever-increasing budget being invested in delivery times, a key factor in retailers' efforts to meet the expectations of consumers now accustomed to receiving their orders ever more quickly.

Over 50% of logistics costs are allocated to delivery management. The rest is shared between good storage, order preparation, after-sales service and insurance.

To increase your company's profitability, you need to find the right balance between your e-commerce logistics budget and your customers' expectations. A satisfied customer is a repeat buyer. It's all about pampering them, as long as you don't jeopardize your business by doing everything you can to seduce them. Hence our next question:

How can you reduce your fulfillment costs while taking into account consumer expectations?

There are several easy-to-implement sales tips designed to help you in your cost-cutting endeavors. Here they are:

1. Optimize inventory management

The more goods you store, the higher your storage costs. And vice versa. Beware, however, of relying on a minimum amount of stock in the warehouse, which multiplies the risk of stock-outs. The right logistics strategy is to define a minimum stock level that you must always have in your warehouse.

Below this threshold for your products on sale, replenishment is the order of the day.

This minimum stock must always meet demand, and take into account major one-off shopping season events such as Sales and Black Friday. It must also allow sufficient time for replenishment.

2. Increase the average basket

By increasing your customers' average basket, delivery and logistics become less expensive. One tried-and-tested strategy is to offer free delivery on minimum orders.

According to the French Institut National de la Consommation (INC), by 2022, 58% of shoppers will have added one or more products to their basket to reach this psychological threshold and benefit from free delivery.

3. Optimize your product packaging

By reducing the size and weight of your packaging, you can have a direct impact on the cost of storing and transporting your products, especially if you manage to get your products into your carrier's lower price bracket.

4. Outsource your e-logistics

Saving time and money is a dream goal for many companies. One of the best ways to achieve this is to outsource logistics. And preferably to a single service provider, to cut costs considerably.

By opting for our Rakuten Fulfillment Network method of outsourcing your e-commerce logistics, you are choosing a single partner to handle every stage of your supply chain: I want to reduce my logistics costs

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by Haro Valentin

Sales Seasonality: Anticipating Sales Peaks and Calculating Your Seasonal Index

Do your sales fluctuate from month to month? Nothing could be more normal. All businesses experience sales peaks and troughs at certain times of the year. This is known as sales seasonality.

Whether you sell physical products or services, whether you operate solely on e-commerce or have your own store: you're affected by the concept of sales seasonality. Weather, vacations, commercial highlights... many parameters affect your sales strategy.

How can you anticipate these peaks in demand by calculating your seasonal coefficient? How can you maximize growth opportunities, thanks to sales seasonality? Find out all the answers in this article.

I. Understanding Sales Seasonality

What is sales seasonality? Definition

Sales seasonality is an event that occurs several times a year. It refers to the fluctuation in demand for a product or service throughout the year. When a company experiences this intense increase in sales activity, it is referred to as a "sales peak".

All companies are affected by these cycles, which impact on their marketing and sales performance. There are many factors influencing sales seasonality:

• Seasons & weather;
• Vacations;
• Cultural events;
• Annual French or foreign festivities;
• Commercial highlights (sales, Black Friday, etc);

Some events are unforeseen, such as natural disasters or the Covid-19 crisis, which disrupted sales of certain products: hygiene and cleaning products, essential items... Meanwhile, e-commerce spending increased by 13% during the health crisis.

Source: Kantar e-commerce barometer

In addition, other events can be anticipated to maximize business growth during these peaks. Ready to explore some examples?

Some examples of sales seasonality

Certain major events or business dates dictate sales seasonality. For brands, it's essential to be aware of them, so as to capitalize on these periods.

By anticipating these key dates and trends, it's easier to anticipate sales forecasts... And to increase sales, market share and growth. All the while, making informed business and marketing decisions to effectively support this growth. For example, in the event of a sales peak, have you considered the strategies to be implemented to increase the average basket?

In an increasingly competitive business environment, this strategy is essential! Here are a few examples of sales seasonality, to give you a better idea of the concept:

• For florists, the two biggest sales holidays are Valentine's Day and Mother's Day. Every year, these professionals can generate up to 30% of their sales on a single day!
• In the outdoor hotel market (such as campsites), 85% of bookings are concentrated in the 6 weeks of summer.
  
• As soon as spring arrives, garden products are in demand. The milder weather invites customers to spend more. Amour Buidine (Sales Manager at ManoMano.fr) told Le Figaro: "16% of sales in this segment are made in April, compared with 3% to 4% between November and February. The same applies to the Internet: we triple our sales of swimming pools and other landscaping products from the first to the second quarter".
  

 

• During the soccer World Cup, the market for TV sets increases dramatically. This was notably the case in 2022, for the World Cup in Qatar. Guillaume Rault (vice-president of Samsung Electronics) confided in a Challenges interview : "There was an upturn in September in terms of quantity. In October, this was reinforced by an increase in market value. We're seeing double-digit increases. Some weeks are 28% or 35% up on last year. The World Cup should enable the TV market to sell 250 to 300,000 more pieces!"

 

You've guessed it: sales seasonality affects every brand on the market, at different times of the year, and according to different criteria of influence. The challenge for brands? To anticipate sales peaks, in order to better manage their supply chain, as well as their marketing and sales strategy.

II. How to anticipate sales peaks?

To identify trends in your market and anticipate sales peaks, here are 3 best practices:

1. Analyze your historical data

Have you tracked and measured your key performance indicators (KPIs)? If you've already launched your business (such as an e-commerce site), it's essential to examine the past, in order to prepare for the future.

So, do you know what your monthly sales are? What are the seasonal trends? How do the average consumer basket, number of orders and conversion rate evolve over the months? All this quantitative data will help you better understand and anticipate sales peaks.

2. Identify local, seasonal and national events

Do you want to prepare for seasonal sales trends? Think about listing all the events that may affect your company, or the market in which you operate. More commonly referred to as a "chestnut", these are the key dates of the year that can influence your marketing and sales strategy.

For example, they could be sales periods, school vacations, sporting events, trade fairs, national celebrations... Position them on an internally shared calendar, so that all teams are aware of them. From the marketing department to product managers and sales staff.

3. Adapt your inventory and human resources

Finally, after analyzing your historical data and identifying future key calendar dates, here's our last tip: adapt your merchandise inventories, as well as your human resources. When demand peaks, your priority is to satisfy your customers. To achieve this, avoid stock-outs. Having the right quantity of goods in stock is a matter of preparation, several weeks (or even months) before the busiest periods.

Then, to deliver a memorable customer experience, don't underestimate the human factor: do you have the necessary in-house team to cope with the rush? In store as in e-retail, anticipate recruitment to guarantee a smooth customer experience.

III. Calculate the seasonal coefficient

To obtain the most accurate sales forecasts possible during seasonal peaks, we need to monitor a specific indicator: the seasonal coefficient.

The seasonal coefficient is a numerical indicator that can be calculated on a weekly, monthly or quarterly basis. It represents the ratio between the actual performance of a product or service during a specific period and its average performance over a longer period.

Its calculation highlights the potential of one period (compared to another) for the sale of a product. Thanks to the seasonal coefficient, you can define whether or not a moment can be considered "seasonal" for your consumer sales.

Here are 3 situations in which it's a good idea to calculate the seasonal coefficient, along with the appropriate formula:

1. Analyze the seasonality of the year's sales

The seasonal coefficient helps you identify the weight of sales during a given period in your company's annual sales. Thanks to its calculation, you can anticipate the marketing actions to be deployed at the next sales peak... And evaluate the effectiveness of the previous action plan put in place.

Here's how it works:

Sales for the month (or defined period) / total sales for the year

Let's take the example of a bicycle accessories e-commerce site. In 2023, the company sold €30,000 worth of products, including €6,700 in January 2023 (corresponding to the winter sales).

Seasonal coefficient = 6,700 / 30,000

Seasonal coefficient = 0.223

January 2023 therefore has a seasonal coefficient of 0.223. This is always rounded to 3 decimal places.

2. Compare seasonality with previous years

Let's go back to the previous example. Now, the e-commerce site selling bicycle accessories wants to know its seasonal coefficient in relation to the two previous years, and track its evolution.

Step 1: calculate average annual sales over the last two years.

22,000 (in 2021) 27,000 (in 2022) = €49,000

49 000 / 2 = 24 500 €

Average annual sales are €24,500.

Step 2: Calculate average monthly sales over the last two years.

4,800 (in January 2021) €5,500 (in January 2022) = €10,300

10 300 / 2 = 5 150 €

Average monthly sales are €5,150.

Step 3: calculate seasonal coefficients for each month

To do this, let's take the average monthly sales figure and divide by the average annual sales figure

5 150 / 24 500 = 0,210

The average seasonal coefficient over the previous two years is 0.210 in January. If we compare this with the seasonal coefficient for January 2023, we see a clear increase in sales, and therefore growth. A good sign for the company's performance!

3. Calculate future sales forecasts

The seasonal coefficient is the ally of forecasting. It also provides an accurate forecast for the coming year. From the monthly coefficients calculated, you can determine the sales forecast for the months of the coming year.

Let's return to our previous example. To calculate sales for January 2024, the calculation is as follows:

Sales for 2023 x seasonal coefficient for January 2023

30 000 x 0,223 = 6 690 €

Forecast sales for January 2024 will therefore be €6,690.

This calculation is based on a linear sales forecast. But be careful! Other parameters may influence seasonal forecasts upwards or downwards.

Our advice? Once you've made your calculations, always compare actual monthly and annual performance with your estimated forecasts. These analyses will enable you to adjust your marketing, stocking and human resources strategy accordingly.

And if you need a helping hand to refine your forecasts and boost your sales performance... Rakuten France is at your side. Here's how.

IV. Rakuten France: your ally in seasonality management

Yes, sales seasonality is an evolving trend, for all players in the retail industry. But here's one thing that never changes: our presence alongside marketplace sellers throughout the seasons. Over 12,000 professional sellers are active on our marketplace. To help them win over our 12 million customers, here's what we're doing:

• Analytical tools: from their dashboard, Rakuten France sellers benefit from advanced analysis tools. Thanks to these tools, they can visualize and understand all their sales data. The ease of use of the analysis tools means that seasonal trends can be identified at a glance... Perfect for adjusting your sales strategy!
• Targeted marketing strategy: from Rakuten France, you can set up targeted marketing campaigns for consumers, based on identified sales peaks. Is there a season when your e-shop needs to boost sales? Maximize your visibility to customers by following our recommendations.
• Inventory management: this is a priority for all e-tailers aiming for growth. To make this easier, you can integrate data from your Rakuten France e-shop into your inventory management system. This makes planning more precise. Ideal for anticipating your next sales peaks.

Now you know how to understand sales seasonality, calculate your seasonal coefficient and anticipate future peaks. Our final piece of advice? Don't wait for the next acceleration period to make the best decisions! Join our marketplace and effectively develop your online business!

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by Haro Valentin

What is e-commerce fulfillment?

 

The advantages of e-commercefulfillment

By choosing the right logistics provider, you increase your chances of ensuring exemplary performance and profitability, with growth as the watchword. E-commerce fulfillment is a real partner for your e-commerce strategy , with the following strengths:

Cost optimization

You can outsource e-commerce fulfillment operations to specialized service providers to reduce warehouse management costs, hire staff andinvest in infrastructure tailored to your needs.

Enhanced customer experience

A smoother shopping experience with faster, more reliable delivery options.This marketing strategy is designed to appeal to a growing number of consumers and build customer loyalty over time.

Flexibility

Your companycan quickly adjust its fulfillment strategy in line with demand and seasonal fluctuations such as sales, Black Friday and the Christmas period. This means you can respond to market and business growth without having to invest in costly and time-consuming additional resources.

Time-saving

Relying on an external service provider to help you manage your e-commerce logistics saves you around 25% of the time you would otherwise spend on your core business. For example, devising new marketing approaches and further developing your offering.

Visibility

Outsourcing your e-commerce logistics has its costs, but these are quickly recouped in view of all the benefits . E-commerce fulfillment providers offer real-time tracking tools that enable companies to monitor their inventory, shipments and returns, improving the visibility of their supply chain.

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What is the Rakuten Fulfillment Network?

As mentioned above, e-commerce fulfillment allows companies to devote more time to their core business, while offering consumers a fast, reliable delivery experience. As a direct consequence, this helps to strengthen customer loyalty and stimulate growth. Provided you find the external service provider that meets your needs in every respect..

With the Rakuten Fulfillment Network, you offer yourself a key solution to increase your company's reach .Here are our key benefits:

• Support for all your fulfillment needs from a dedicated account manager.
• Intuitive Rakuten Merchand Dashboard for simplified business management .
• Clear pricing with fixed prices and no hidden costs, based on your needs.
• Storage in one of our globally dispatched and connected warehouses.
• Real-time stock management and replenishment requests.
• Fast order preparation and dispatch.
• After-sales service and reverse logistics.
• Possibility of opening an e-commerce store on our Rakuten marketplace .
• Manage your business from any other e-commerce site, your own or that of one of our competitors.

 

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by Haro Valentin

Reverse Logistics: How to Manage Your Product Returns Efficiently?

 

How does reverse logistics work?

For a better understanding, reverse logistics can be broken down into 3 stages:

1/ Return processing

The consumer signals that he or she wishes to return a product, the company accepts the return and schedules shipment. Some sites also provide returns already printed within the parcel. They are informed of the return when it is processed by an external service provider.

2/ Sorting returned products

Here you need to inspect the products and determine their return category. To improve the efficiency of your reverse logistics, don't hesitate to categorize products according to different options: to be repaired, resold as new, resold as a return, recycled, scrapped or refurbished.

3/ Restock

Put products ready for resale back on sale, and integrate them back into your existing stock

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by Haro Valentin

Marketplace: Essential Guide to Boosting Your E-Commerce

8.8 billion dollars: yes, that's quite a sum. And, above all, it's the estimated share of sales on marketplaces between now and 2025. This would represent 70% of e-commerce, according to McKinsey (2022) and Be STF research & analysis.

Digital marketplaces continue to grow and seduce buyers and sellers alike. Good news for your company: it's not too late to learn how to ride the wave.

If you're interested in the world of marketplaces, you've come to the right place: so, what is a marketplace? How does it work? What are the best practices for selling effectively on them?

Follow the guide!

Definition: What is a Marketplace?

A marketplace is an online platform that facilitates contact between buyers and sellers. It's also known as a marketplace, shopping platform, multi-vendor e-commerce site..

On this type of website, sellers (independent, professional or private) can sell their products, solutions or services. In most cases, a commission is charged by the marketplace for each sale made. Other remuneration models exist (and we'll tell you about them shortly).

To best visualize this definition, imagine a large digital shopping mall. The marketplace is the mall. Each store inside represents a partner vendor. Visitors, meanwhile, can stroll from store to store... without leaving the mall, without disconnecting from the marketplace.

Does this business model appeal to you? You're not alone. For several years now, the marketplace world has been booming. Consumers are seduced by it, with 92% of shoppers planning to use marketplaces more and more (Mirakl 2022). 52% of French people even say they prefer to do all their shopping on a single site (Yougov 2021).

For sellers, a presence on a marketplace offers increased visibility, web traffic and sales. For example, in 2020, despite the Covid-19 crisis, partner sellers increased their sales by an average of 24% on marketplaces. Marketplaces grew at twice the rate of e-commerce. And this is just the beginning! (Mirakl study, 2021).

How do Marketplaces work?

Do you sell products or services? BtoC or BtoB? There's bound to be a marketplace platform that's right for you. But before choosing one, it's important to understand the different models that exist.

Not all marketplaces are remunerated in the same way. For example, some marketplaces offer their vendor partners :

• A commission on sales: the marketplace takes a percentage of each sale. These commissions may be fixed or proportional to the amount of the transaction.
• Registration or listing fees: sellers must pay a one-off or recurring fee to publish their products, services or solutions on the platform.
• Additional fees: for example, some platforms like Rakuten offer services to outsource inventory management, storage or shipping of your products.
• Monthly subscriptions : the price of these subscriptions generally covers features and benefits for partner sellers (such as greater visibility for their offers, lower commissions, etc.).
• Paid advertising: to highlight certain products or services, platforms may offer paid promotion options on ads.

Some marketplaces may also combine different remuneration models, to diversify their revenue streams. What's more, some platforms also offer direct sales. This is not the case with Rakuten, which focuses 100% of its efforts on sellers.

At Rakuten, our compensation model is based on two offers, tailored to your business:

1. A free starter package, with a higher variable commission and management fees.
2. A paid expert subscription, with a lower variable commission and management fees.

 

Why sell on a Marketplace?

Now you know what a marketplace is, and how this type of platform pays for itself. But as a professional seller, do you know why you should choose this simplified form of e-commerce?

If you're still hesitating to take the plunge, here are 7 advantages of selling on Marketplace 2.0:

• Improve your company's visibility: each marketplace benefits from an established user base and traffic. Sellers can thus increase their visibility.
• Multiply sales opportunities: with its large, ready-to-buy customer base, a marketplace facilitates the generation of new opportunities. Sellers benefit from a continuous flow of potential customers to their listings.
• Reduce marketing costs: by joining a marketplace, sellers don't have to start from scratch. They can take advantage of integrated marketing tools (product promotion, targeted advertising, recommendation of similar products) and an existing website (without having to develop their own technological infrastructure and communicate on it). The marketplace's loyal visitor base also limits acquisition costs. The result? Big savings!
• Simplify sales and logistics processes: many marketplaces, such as Rakuten, offer order management, storage, packaging and shipping services. With such simplified processes, sellers can concentrate on producing quality products.
• Secure transactions: selling on a marketplace means taking no risks when it comes to secure payment. This ecosystem is highly regulated. As an intermediary, the platform guarantees the smooth running of your sales transactions and data management.
• Create a complementary sales channel: joining a marketplace doesn't mean giving up your traditional sales channel (physical store, e-commerce site, social shopping, etc.). It simply means multiplying additional sales opportunities! The marketplace is a choice compatible with your other channels, to amplify your reach on the Internet.
• Boosting trust and credibility : a reputable marketplace offers a high level of credibility to sellers. And the good news is that buyers prefer to shop on a platform they can trust. This is your chance to earn their trust too!

What are the different types of Marketplace?

There's a marketplace for every business. Whatever your sector, you can invest..

1. A B2C marketplace

A case in point? Rakuten.

At Rakuten, we've been supporting the digitalization of 8,500 B2C businesses since 2002. Sellers of products or services for private individuals can create their online store on our marketplace, in a digital shopping mall visited by 15 million people.

2. C2C Marketplace

A case in point? Rakuten too!

In our 2.0 shopping mall, 50% of products sold are second-hand. Consumers can sell their products, thanks to the "consumer to consumer" model. They benefit from numerous advantages (€5 free on the first sale, immediate redemption, Club R loyalty points, etc.)

 

 

3. B2B Marketplace

A case in point? Unite (formerly Mercateo).

Unite (formerly Mercateo) has been revolutionizing the B2B market for 20 years. On this business-to-business marketplace, companies can buy office supplies and furniture, industrial equipment, catering equipment... A total of over 3.5 million products, in 13 countries!

In B2B, there are also numerous "cloud marketplaces". These online platforms offer cloud services and solutions from different suppliers, accessible from a single location.

4. Services marketplace

A case in point? Rover.

Rover is a specialized marketplace enabling pet owners to find pet sitters and walkers, worldwide. Over 2 million pet owners in 10 countries have booked services through the marketplace!

5. Vertical Marketplace

A case in point? Doctolib.

Doctolib is the leading vertical marketplace for e-health. The site enables over 340,000 healthcare establishments in Europe to book appointments online for patients. today, 80 million patients use the platform!

6. Joining and selling on a Marketplace: best practices

Tempted by the marketplace adventure? Here are the steps and best practices to help you get started:

1. Find the right platform: find out how to choose a marketplace for your e-commerce business. But beyond the platform itself, there's a crucial question: should you opt for a marketplace or create your own independent online business?
2. Setting up an account: each digital marketplace has its own procedures. With our solution, for example, registration takes just a few clicks. All you have to do is create a professional seller account and follow the steps indicated. Once your details have been validated, you can start selling your products straight away. Simple, fast and effective.
3. Define the right pricing strategy : on a marketplace, the prices of your products can be compared. Remember to set competitive prices to attract buyers.
4. Optimize your product descriptions: quality descriptions and photos are essential for selling your products. Without them, it's hard to establish your credibility and win the trust of buyers.
5. Ensure good stock management : if you choose a platform that doesn't manage your stocks, it's your responsibility to ensure that your products are always available, to avoid any problems when orders are placed. Check your stocks regularly, set a critical threshold for restocking, and work (if necessary) with several suppliers to keep up to date.
6. Deliver quality customer service : customer satisfaction is a priority. It is then analyzed by the marketplaces. At Rakuten, we use the Merchant Quality Score. It's based on ratings and opinions given by buyers, delivery experience and catalog quality. The higher the score, the greater the visibility of the partner seller's ads in strategic locations (Google Shopping pages, price comparison sites, product category home page, etc.)
7. Benefit from ongoing support: at Rakuten, all our sellers have access to an E-Commerce Consultant. These dedicated E-Commerce Consultants support the platform's 8,500 professional sellers on a daily basis. Got a question? A need? We've got you covered!

Ready to develop your B2C sales outlet on a marketplace? To help your growth take off, join Rakuten France.

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by Haro Valentin

How to Improve Inventory Management?

With our Rakuten Fulfillment Network method, you can put all the chances on your side to grow your business in the best possible conditions. A 100% intuitive solution tailored to your needs, which manages your inventory and replenishment requests in real time, as well as the preparation of orders and the storage of your goods in one of our many warehouses around the world. All this at a fixed price, with no hidden costs, truly tailored to your needs.

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by Haro Valentin

E-commerce Customer Service: How to Satisfy and Retain Your Customers

In e-commerce, the relationship between customer and brand is unique in that it is dematerialized. Brands rarely meet their buyers face-to-face, unlike in traditional retail. Yet e-buyers need attention, assistance and support just as much: that's what customer service is all about .

The aim of e-commerce customer service is to deliver impeccable customer service to consumers who buy online. The aim is to help customers before, during and after their purchasing journey. Typically, all these interactions are handled by a dedicated department within the company. But delivering memorable customer service and experience must be everyone's priority, in-house!

In this guide, find out how to optimize your online customer service. Benefits, differences with in-store customer service, best practices... Let's get started.

1/ The benefits of e-commerce customer service

5 out of 10 French customers contact customer service with a question or an update on their order or delivery (source: Essendex survey, 2023). More often than not, these requests concern the resolution of a problem... But that's not the only role of customer service!

 

Graph Source : Essendex survey 2023

 

A (good) e-commerce customer service department takes care of rapid assistance, managing returns and refunds, collecting customer reviews... But also of personalizing the shopping experience, by proposing exclusive offers and promotions. The aim? Take care of customer relations on digital channels, and offer a memorable consumer experience.

Deploying such an e-retail customer service strategy offers numerous advantages:

• Improved customer knowledge : at the heart of a customer service approach is listening. By listening to customers' needs, expectations and problems, you can improve your knowledge of them. And thanks to this customer knowledge, you'll be able toanticipate the best actions to satisfy each customer. Perfect for boosting conversion rates over the long term!
• Lower customer acquisition costs: thanks to exceptional customer service, companies can increase re-purchase and loyalty. And thus reduce their prospecting and acquisition efforts (and, above all, costs!). A new customer costs on average 5 times more to acquire than one to retain... Hence the importance of delivering perfect assistance, at every stage of the purchasing process.
• Increased customer loyalty : according to Microsoft, 95% of customers consider support to be an important criterion when choosing and deciding to stay with a brand. For an online store, customer service is the cornerstone of retention and loyalty. This is one of the main benefits: thanks to the efforts made by customer support, loyalty increases!
• Increased growth: the impact of good customer service on ROI and sales is considerable. First of all, if customer service helps build loyalty, this loyalty rate is reflected in profits. According to a study by Bain & Company, increasing customer retention rates by just 5% can boost profits by 25% to 95%. Today, 64% of business leaders say that customer service has a virtuous impact on their brand's growth (source: Zendesk, 2023). Food for thought!
• Improving the customer experience: in e-commerce, the experience is not just transactional. It's also relational! When a customer service department responds responsively to customer expectations, customers are all the more satisfied. This increase in customer satisfaction impacts loyalty, and all the other benefits described above. Remember: the customer experience (both in-store and online) remains the most important preference criterion for consumers... And customer service is part of the reason why! (Source: Dunnhumby Barometer, 2023)
• Improved team productivity: in e-commerce, having a dedicated customer service department is a guarantee of productivity. But it also enhances the quality of exchanges, thanks to a team trained in customer support and relationship management. Deploying a customer service department and a dedicated team increases the productivity of all other teams... Where everyone can concentrate on their missions, as efficiently as possible.

Now you know why you should set up a customer service department for your online store, DNVB or ONVB. But do you know how to differentiate it from in-store customer service? And which features to deploy, to deliver the right 2.0 support?

2/ In-store customer service vs. e-commerce

No, in-store customer service is not the same as e-commerce customer service. There are many differences. And online site owners must learn to adapt, to satisfy consumers.

Between the physical store and the e-commerce site, each channel has its own strengths and constraints, influenced by buyers and the specificity of the product or service on offer. And if you're an e-commerce player... Here's how to take advantage of customer service 2.0, which modernizes and improves the customer experience:

Criteria	Physical store	E-commerce
Availability	Limited to store opening hours.	24/7, accessible at all times.
Interaction	Direct and personal.	Mainly digital (e-mail, chat, social networks).
Problem resolution	Often immediate for returns and exchanges.	Can be delayed by delivery and processing times.
Personalization	Based on human interaction.	Use of data to offer personalized solutions.
Advice	Personalized advice and product demonstrations.	Advice via FAQ, forums or chatbots; less personalized.
Returns and exchanges	Immediate processing possible.	Requires shipping, with variable lead times.
Associated costs	Depends on store policy.	Return or shipping fees may apply.
Accessibility	Requires physical presence of customer.	Accessible from any location with internet.
Request tracking	Managed in-store without systematic digital tracking.	Detailed, automated online tracking of requests.
Technology	Limited to in-store equipment.	Technological advances such as AI to improve after-sales service.

Thanks to electronic channels or tools, connected customers want to benefit from unified assistance. The challenge for e-commerce customer service? To offer reactive, personalized assistance, accessible from any support and seamless. Indeed, customers hate having to repeat themselves, between different channels of exchange with the company. 93% of them are even prepared to spend more if the brand avoids repeating itself. And 73% of customers want to be able to start a discussion on one channel, then continue on another... And face an interlocutor who understands them, who knows them.

But how do you create this seamless, unified customer service experience? How do you deliver the best online support? Follow the guide!

 

3/ E-commerce: 6 best practices for outstanding customer service

1. Focus on omnichannel customer service

Today, 57% of customers prefer to interact with a company via digital channels. Even if, in the event of a major problem, the most suitable channel remains the telephone for 81% of professionals (source: Salesforce Report, 2023). So, e-mail, telephone, social networks... which channel should you choose?

Rather than asking the question of "which channel to choose", ask yourself: what are the complementary channels for my target e-commerce customers? To meet the needs of all your customers, you need to be omnichannel. The aim is to offer consistent points of contact to meet consumer expectations. But be careful! Each channel requires resources (human, technological or financial). The multiplication of channels must not impact your responsiveness!

2. Respond quickly to customer requests

Responsiveness is one of buyers' top expectations when it comes to e-commerce customer service. in fact, 39% of customers consider it a priority to receive a response or solution as soon as they make their first request (source: Qualimétrie, 2022). On the other hand, waiting hours on the phone, or e-mailing support several times... that's the best way to drive customers away!

To deliver quality customer service, you now know what to focus on: responsiveness! Digital channels such as chatbots and instant messaging are particularly interesting for responding to customers in real time.

3. Offer customer autonomy tools, such as an FAQ page

94% of French people want to solve their own problems (source: Yext study, 2023). Today, autonomy is paramount. With just a few clicks, consumers want to find accessible answers, at any time of the day or night. To guarantee such access to information and answers to the most frequently asked questions, here's a golden tool: the FAQ.

On an e-commerce site, FAQs can be used to group together the most frequently asked questions, such as :

• What delivery methods are available ?
• What are the conditions for returning a product?
• What should I do if an item is defective?

The ideal solution? Create a dynamic FAQ. This tool integrates a search bar on the FAQ page, enabling the customer to type in specific keywords... to bring up the right question, providing the right answer. Rather than scrolling endlessly through a web page.

4. Personalize assistance, for maximum satisfaction

Being treated like a number: that's what customers hate, in e-commerce as in retail. Especially when it comes to asking for help! As soon as a customer contacts your customer service department, make sure you personalize your exchanges. Customers need to feel unique, listened to and recognized.

Here are a few best practices to demonstrate this personalization:

• Collect, analyze and centralize customer data. When you contact them, your support team will know their purchasing history, preferences, key information, etc
• Address customers by name. Whether you're communicating with them in writing (by e-mail, on social networks, by chatbot, etc.) or over the phone, always make sure you name them, to create a sense of proximity.
• If there's a quid pro quo to offer (such as a gift, as compensation), be sure to offer a personalized product or service recommendation. Rely on previous purchases to offer the most appropriate attention.

5. Train the team for maximum efficiency

You can't become a customer support expert by snapping your fingers. To take care of customer relations, offer effective assistance, respond to customer problems in a responsive and appropriate way... Training and a qualified team are necessary! Human and interpersonal skills are required, as well as technical skills.

Indeed, to respond to the concerns of online buyers, it's important to be trained in the products, services and tools used in-house. Knowledge base, customer support channels, self-care tools such as chatbots... A properly trained customer service team means optimized customer satisfaction!

6. Collect, manage and respond to customer feedback

Online reviews are an integral part of customer service. What do customers have to say about your company after they've purchased your products or services? And what do you do with these reviews once they've been collected? And who is responsible for responding to each customer?

Defining a customer feedback strategy is essential to delivering a quality experience. In e-commerce, your three priorities are to :

• Collect post-purchase reviews : via a satisfaction questionnaire, or through spontaneous review platforms.
• Manage the opinions collected : share them with all internal teams, and use these opinions to demonstrate continuous improvement (on the product, marketing, the online purchasing process, etc.). Don't forget to publish each product review on its own product page.
• Respond to all feedback: whether it's positive or negative, show customers that every piece of feedback counts.

By doing so, you take care of existing customers, while attracting new buyers! To find out more about customer feedback strategy and measuring customer service success... Be patient. We'll explain it all right after.

4/ Should you automate your e-commerce customer service?

This is THE big debate. Should you automate all or part of your customer service for your e-commerce site? At Rakuten, here's our opinion: automation tools are golden levers for relieving the burden on support teams... without replacing them! Indeed, technology is not intended to replace an entire team of online customer advisors. On the contrary, it can speed up the processing of the most common customer requests.

Thanks to these automated tools and processes, customer service teams can concentrate on less time-consuming or repetitive tasks. Like responding to the most important customer issues. It's a real time and efficiency saver.

Among the automation tools most frequently used by e-commerce customer services are selfcare solutions. These chatbots or FAQ solutions enable customers to be more autonomous, and get instant feedback on their questions. Certain channels can also be automated, such as e-mail or telephone messaging. The latter is known as an IVR, or interactive voice response system.

Finally, knowledge-base or CRMtools are particularly important for automating part of the customer management process in-house.

If you'd like to start automating your e-commerce customer service, here are a few interesting tools, depending on your needs:

E-mail automation	Salesforce Pardot, Mailchimp, Sendinblue , ActiveCampaign HubSpot Email Marketing Get Response , Constant, Contact ConvertKit, Drip, Autopilot
Live chat and chatbots	Dialogflow, ManyChat, Drift, Intercom, Chatfuel, Zendesk Chat, Tidio, Botsify, LivePerson, Watson Assistant
Customer relationship management (CRM) software	Salesforce, HubSpot CRM, Zoho CRM, Microsoft Dynamics 365, Freshsales, Pipedrive, Insightly, Oracle CRM, SAP CRM, Nimble
Interactive Voice Response (IVR)	Twilio, Genesys, Avaya, Cisco Unified Contact Center, NICE inContact, 8x8, Five9, Aspect, RingCentral, Interactive Intelligence
Skill-based routing	Avaya, Cisco, Genesys, NICE inContact, Five9, 8x8, RingCentral, Aspect Software, Mitel, Interactive Intelligence

5/ Customer service and marketplaces: how to manage after-sales service?

Now you know how to manage customer service on an e-commerce site. Now imagine: you decide to join our 12,000 sellers on Rakuten, our marketplace. You create your e-shop, complementary to your e-commerce site, directly on our digital marketplace. Our 13 million loyal buyers are just a click away ... And you'll quickly make your first sales. But if you have any questions, how do you handle customer relations? How do you provide customer service on a marketplace?

At Rakuten, nothing could be simpler. Our marketplace offers complete, dedicated support for after-sales service. We provide you with specific tools for your online store. And as a Rakuten seller, you'll benefit from extensive support via internal messaging, to help you manage and optimize your after-sales service.

Delivering service excellence (omotenashi) is one of Rakuten's fundamental pillars. Our priority? To guarantee a caring approach and a committed presence with our sales staff... And to encourage them to adopt a similar attitude towards their customers!

To find out more, find out how to communicate with a Rakuten buyer and answer their questions.

6 / Measuring the success of your customer service: the last essential step

E-commerce customer service now holds no secrets for you. Ready to launch your own digital customer support strategy? Once you've deployed your support and initiated the first interactions, think about this indispensable step: measuring the strategy's performance. Gathering KPIs is essentialto improving customer experience and operational efficiency .

Here are the main KPIs to collect and track:

1. First Contact Resolution Rate (FCR): Indicates the percentage of problems resolved on first contact.
2. Average Response Time (ART): Calculates the average time taken to respond to customer queries.
3. Average Resolution Time (ART ): Measures the average time required to completely resolve customer queries.
4. Call Abandonment Rate: Percentage of calls abandoned by customers before speaking to an agent.
5. Contact Volume: Tracks the total number of requests received by all service channels.
6. Agent Satisfaction Rate: Assesses the level of satisfaction and well-being of customer service agents.
7. Sentiment Analysis: Uses AI to analyze the emotions expressed in customer communications.
8. Cost per Contact: Calculates the average cost of handling a customer service request.
9. Customer Satisfaction (CSAT): Measures immediate customer satisfaction after an interaction or purchase.
10. Net Promoter Score (NPS): Evaluates the likelihood of customers recommending your company to others.

These last two indicators are particularly important. As we mentioned earlier in this article, collecting customer reviews is essential for gaining insight into customer satisfaction and recommendation.

At Rakuten, this monitoring is a priority. We offer you the opportunity to evaluate your quality as an e-retailer through several criteria linked to customer satisfaction, your delivery strategy and your catalog. So you can improve the quality of your customer service... and much more besides!

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by Haro Valentin

Influencer marketing and e-commerce : complete guide

92% of consumers trust influencers' recommendations more than the brands themselves (source: Nielsen). To gain the trust of their target audience (as well as credibility and authenticity), e-commerce sites have every interest in relying on this lever. This is known as word-of-mouth 2.0 or influencer marketing.

The aim for e-tailers is to forge partnerships with influencers, who can then promote their products online, particularly on their social networks. Interested in influencer marketing? Follow the guide and find out everything you need to know about influencer marketing in e-commerce.

What is influencer marketing in e-commerce?

Influence and influencer marketing: definitions

At the heart of the concept of influencer marketing lies that of the influencer. An influencer is a person who, through his or her notoriety and media exposure, has great power to influence public opinion and consumers. Now recognized as a profession, influencers create content for their audience. This content is often created in partnership with e-retail brands, to promote their products or services. When a brand chooses to work with an influencer, it implements an influencer marketing strategy.

Influencer marketing is a type of marketing based on a partnership between a company and an opinion leader (influencer). The aim is to promote a brand, product or service through content created on social networks.

Before choosing an influencer with whom to collaborate, the brand needs to decide :

• • The type of influencer: some public figures have a small, engaged audience of less than 5,000 people. These are known as nano-influencers. In ascending order, we then classify micro-influencers (between 5,000 and 100,000 subscribers), macro-influencers (between 100,000 and 500,000 subscribers) and celebrities (1 million subscribers).
    
  • The type of collaboration : among the various possibilities, we find the traditional product placement, through a post on social networks (this is a technique favored by 76% of influencers in 2023, according to Reech). Online stores can also be seduced by content sponsorship or the organization of a competition. In B2C, unboxing is also a popular format: the influencer unwraps a product received live, and expresses his or her emotions first-hand.
  • Retribution: in exchange for such promotion, the influencer may receive financial remuneration, a commission on sales or material compensation, such as a free product.

Influence marketing trends in e-commerce

Influencer marketing has been a preferred lever for e-tailers for several years now. Content created by influencers helps to increase visibility and boost sales. But every year, new trends emerge. Knowing about them and making them your own increases your chances of selling more... and better!

New trends in the e-commerce influencer market include, for example:

• The rise of long-term collaborations: Internet users are not fooled. To trust an influencer and a brand, they need to be sure that the collaboration is real, authentic and credible. Today, consumers prefer influencers who collaborate with fewer brands, but on a long-term basis. Your mission as an e-commerce site? To collaborate with an influencer ambassador, over a period ranging from 6 months to 1 year. The quality and durability of a partnership are real levers of trust.
  
• The rise of micro-influencers: campaigns run with micro-influencers generate an average engagement rate of 7%, 22 times higher than that of major celebrities (source: Influencer Marketing Hub study). This statistic confirms the impact of smaller influencers, capable of creating more personal and authentic relationships with their audience. E-tailers therefore have every interest in incorporating nano- and micro-influencers into their thinking in 2024. It's no longer the size of the community that counts... but the rate of engagement!
• An increasingly strict legal framework: the new Law of June 9, 2023 now provides a framework for commercial influence, in order to combat the excesses of influencers on social networks. This law now requires content creators to specify the words "advertising" or "commercial collaboration" when publishing a post paid for by a company. They are also obliged to declare for tax purposes the receipt of products or gifts sent by brands. To maintain their credibility, e-commerce sites therefore need to pay extra attention to the reliability of the influencers with whom they collaborate, as well as to compliance with the new legal rules

Source: Reech study, 2024

The benefits of Influencer Marketing in e-commerce

• Increased brand awareness

An influencer marketing campaign enables you to promote your e-commerce site to a wider audience. When a content creator communicates about your products, thousands of people discover (or rediscover) your brand.

In this way, you benefit from the reputation of an opinion leader to increase your own brand awareness. This rise in brand awareness is also accompanied by increased visibility and traffic on your e-commerce site, as well as on your social networks.

• Boosting sales and ROI

Influencer marketing is a genuine acquisition lever. It influences Internet users' thinking and buying behaviour, thanks to the recommendations of content creators.

71% of consumers are more likely to buy a product or service thanks to a publication on social networks (Source: Hubspot). As for influencers, the average conversion rate achieved thanks to their sponsored content is 2.55% (Source: Grapevine study).

So it's no surprise that many retailers are investing in this marketing strategy. Return on investment is a driving force: 89% of marketers claim that the ROI of influencer marketing is comparable or better than that of other marketing channels (source: Mediakix study).

Let's take an example of collaboration, between the Lancaster brand and influencer Juste Zoé. Together, they decided to go further than sponsoring a TikTok video or organizing an Instagram contest. The brand and the content creator co-created a unique handbag in 6 colors. In just one weekend, over 800 sales were made, with the bag selling out in 48 hours. This success story perfectly illustrates the power of influence on sales!

• Increased credibility and confidence

When a popular content creator recommends one of your e-shop's products, you instantly increase your "trust capital". As we've seen, Internet users are more likely to trust recommendations from trusted third parties, such as friends or influencers.

This impact on trust goes hand in hand with an increase in credibility: if a subscriber trusts an influencer who recommends a brand, then he or she is more likely to find the brand credible... And to make a purchase.

So, to develop your credibility, brand awareness and customer acquisition, you know what you have to do: rely on influencer marketing. 

How do I find influencers?

Now you know why you should implement an influencer marketing strategy. Ready to take action? The first step is to find the right influencers, to create the right partnerships. 34% of brands say they have difficulty finding influencers, not least because 67% are concerned about fraud or unreliable content creators (source: Shopify).

So, to find influencers, here's our advice for e-commerce sites: if your social network monitoring isn't working, get in touch with influencer agencies. These key partners offer complete support, to set up the whole campaign, in complete security. While the price may be higher, this solution offers a great deal of comfort.

 

Which communication channels should I choose for an e-commerce influencer campaign?

Territory Influence recently told BDM: "In 2024, as audiences diversify their online presence, brands need to adjust their strategies accordingly. This requires collaborating with influencers whose presence spans multiple channels".

Among the most effective communication channels for e-tailers' influencer marketing campaigns are :

1. Instagram

Instagram is the world's most powerful social network for influencer marketing. With overa billion monthly active users, brands can take advantage of a wide range of target demographics. What's more, the average engagement rate for an influencer on Instagram is 1.9%: a very good score!

On this social media, influencers can publish visual content, whether photos, videos, stories or real. The formats lend themselves perfectly to different types of collaboration: insights, sponsored ads, unboxing... Or even direct collaborations with influencers via Instagram Shopping.

On the other hand, influencer marketing is increasingly competitive and expensive on Instagram. With the rise of influencers on the network, some collaborations may seem less authentic. Finally, beware of frequent algorithm updates, which can affect the visibility of brand publications... And influencers!

2. TikTok

TikTok has only been around since 2016, but had accumulated over 1.5 billion active users on the app by January 2024. 45% of marketers use Tik Tok for their influencer marketing campaigns, mainly to target a young, dynamic audience that appreciates the short video format, a symbol of engagement and virality.

On this medium, the power of micro-influencers is no exception to the rule: they have an engagement rate of 17.96%, compared with 4.96% for better-known influencers (source: Affde). The algorithm is also favorable, as it values organic discovery and trending content.

However, e-commerce sites need to understand that a young audience dominates on TikTok, which may not be suitable for all products to be promoted. What's more, the lifespan of a video is only a few days. As trends evolve rapidly, long-term campaign planning can be difficult.

3. Facebook

Facebook is the most widely used social platform, with 2.8 billion monthly active users . Thanks to its highly precise advertising tools, influencer campaigns can be targeted effectively, and performance can be measured efficiently.

On Facebook, influencers can also leverage different formats: written posts, photos, videos, stories, groups and communities in which to interact... Community interaction is also at the heart of Facebook usage, particularly within groups.

However, organic engagement (or reach) is declining over the years, requiring brands to increase their advertising spend. The audience also tends to age, which can be a disadvantage for e-commerce sites targeting a younger audience. Finally, if you're new to marketing, the complexity of Facebook's advertising tools can be frightening.

4. Other promising channels

Other promising channels for influencer marketing (B2C or B2C) include :

• LinkedIn: ideal for reaching a professional and B2B audience, LinkedIn also helps reinforce a brand's credibility and authority. The audience and engagement rates are more limited, and influencer campaigns can be costly, but it's a platform of the future for B2B influence.
  
• Twitch: this live streaming platform broadcasts reliable, authentic content. Subscribers can respond live to content creators' product presentations, increasing engagement. To date, 6% of professionals say Twitch is their most influential channel.
  
• YouTube: vlogs, tutorials and reviews (of brands and products) are the most popular content on this platform. With its accessible, dynamic video format, it's a preferred lever for marketers. Today, 90% of Internet users discover new brands thanks to YouTube videos... A great opportunity to increase visibility and boost e-commerce sales!

5 tips for a successful influencer marketing campaign

Would you like to launch an influencer strategy to promote the products on your e-commerce site? Excellent decision. To help you implement this new marketing lever, here are our recommendations:

1. Define objectives: clear, measurable objectives are the common thread running through your strategy. So, why do you want to use one or more influencers? On average, 50% of the campaigns launched are aimed at improving brand image, 42% at generating online sales and 39% at expanding the audience.
   
2. Choose the right influencers: depending on their relevance, the size of their audience, their positioning on one or more themes, their rate of engagement... To help you choose and contact influencers, you can call on the services of a specialized agency.
3. Draw up a precise brief: to ensure that the influencer's communication is as credible as possible, your mission is to brief them effectively. A brief document can include a presentation of your e-commerce site, your values, a detailed presentation of the products to be promoted, examples of arguments to be put forward... The brief is also accompanied by a contract, to secure the expectations and financial terms of the partnership.
   
4. Discuss the content: before the influencer publishes a post or video, discuss and agree on the content to be created. The more personalized the campaign, the greater the impact of the content. For long-term collaborations, also discuss an editorial calendar, various commercial highlights and brand news. At the time of publication, also make sure that the content creator complies with the legal framework in full transparency, by mentioning the collaboration.
   
5. Track and measure performance: this is the final step in any influencer strategy. Performance analysis is essential to calculate the campaign's ROI. To achieve this, monitor the following KPIs: engagement rate, number of subscribers on the brand's social networks, evolution of website traffic, conversion rate... Depending on the results, you can make continuous improvements to your future marketing campaigns!

E-commerce: 3 examples of successful influencer campaigns

• Joone

This baby care brand has increased its popularity through influencer marketing, in particular through long-term campaigns with influencers. Macro and micro-influencers share Joone's values: transparency, authenticity and simplicity.

Thanks to publications on social networks, over 3 million targets have been reached. The EMV (earned media value), which corresponds to the means of measuring the return on investment of the content created, is around €96,000.

• Hello Jack

Hello Jack is a D2C (Direct to Consumer) pet food company . To conquer the market, right from its launch, the brand relied on an influencer marketing strategy: for the first two months, the company sent products to over 500 KOLs (Key Opinion Leaders) on Instagram and Facebook.

The results? Nearly 3 million reaches of the publications, and the creation of an active community of 9,000 followers on the brand's Instagram, as well as numerous sales.

• Daniel Wellington

The watch brand is a benchmark in influencer marketing. Daniel Wellington has collaborated with hundreds of micro-influencers and macro-influencers, to promote their products. Influencers share photos of themselves wearing the watches, on Instagram, with a dedicated hashtag and a promo code for their followers.

In one year, thanks to these advertising campaigns, over 1.2 million publications have been indexed thanks to the hashtag. The company's subscriber base grew by 1.1 million, and sales soared: 214%!

Conclusion

Have you just created your e-shop, from an e-commerce site or marketplace? Now you know how to boost your visibility and product sales... Thanks to influencer marketing.

In addition to this acquisition strategy, think of other useful marketing levers to boost your growth. 

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by Haro Valentin

Choosing the Optimal Pricing Strategy for E-commerce

39.4 million French people buy on the Internet: that's 500,000 more buyers than last year, according to Fevad (2024). E-commerce is winning over more and more customers... And the number of online stores is growing too. France is even considered Europe's second-largest e-commerce market, just behind the UK.

So, for professionals, the competition is real. But how do you stand out from the crowd, make a profit and attract as many customers as possible, all at the same time? The answer can be summed up in 3 words: pricing strategy.

With a good pricing strategy, sellers are sure to sell more, and better. And this is true whether they offer their products via e-commerce or marketplace. So, what are the different pricing strategies? And how do you choose the right price for your products? Follow the guide!

The importance of pricing strategy in e-commerce

Pricing strategy is a crucial issue in e-commerce. In fact, it's one of the most important elements for consumers: while a fair price can be a motivating factor for purchase, a price deemed too high can drive buyers away to the competition.

For 2.0 sellers, product pricing is a strategic action to be taken as early as possible, right from the creation of the e-commerce site or before joining a marketplace such as Rakuten. It's part of the 4P strategy (Price, Product, Place, Promotion)... And the only one to be a profit structure, rather than a cost structure!

Beyond simply offering "the best price", this strategy must reflect the company's pricing identity. This pricing identity rests on 4 pillars (source: La stratégie Prix, Dunod):

1. Consistent price positioning: product prices must be consistent with each other and with the brand image. This pricing positioning must be clear to buyers (low-cost, high-end, mid-range, etc.).
2. Offer legibility: buyers must be able to find their way easily between the different products. Product price comparisons must not be complex or illogical.
3. Price promise : the prices offered must respect the promise made to the customer, with regard to the product or range of products.
4. Responding to needs: e-tailers must ensure that their prices respond to customers' needs, without restricting the shopping experience.

Once these fundamentals have been defined, an optimal pricing strategy offers sellers the following benefits:

• Improved competitiveness: pricing is a golden differentiation lever, enabling you to maintain your competitive edge in a booming e-commerce market.
• Increased profits and profitability : the right pricing increases margins, profits and growth.
• Customer loyalty: as long as price doesn't become an obstacle, customers remain loyal and committed. Ideal for long-term retention!
• Optimized inventory management: an effective pricing strategy allows you to optimize inventory management, in particular through prices that fluctuate according to the time of year, to sell off items that were previously unsold.
• Enhanced brand image : price is an essential component in the perception of a company. Perceived value varies according to the prices set for products.

However, to take advantage of all these benefits, you need to know which pricing strategy to choose, for your online store or marketplace presence... Let's discover the different possibilities.

6 e-commerce price strategies

Traditionally, product manufacturers share a recommended retail price (RRP). However, e-tailers are free to set their own prices, in particular to increase their margins. Different approaches are possible. Here are 6 of them:

1- Competition-based pricing

The prices charged by competitors are key indicators for setting your own prices. For example, if you offer your products on a marketplace like Rakuten, you can analyze the selling prices offered by other sellers before posting your own:

Based on competitors' prices, you can then opt to :

• A premium strategy: sell your products at a higher price than your competitors, because your perceived value is higher and more upscale.
• An alignment strategy: sell your products at the same market prices as your competitors, to avoid a price war.
• A low-cost strategy: sell your products at lower prices than your competitors, to attract more cost-conscious customers.

2- Cost-based pricing

To calculate the "right price", you can also take into account internal cost factors. What are your manufacturing and storage costs? Your delivery costs? Your target gross margin?

Depending on your answers to these questions, you'll be able to set pricing based primarily on costs. Your mission: to ensure a profit margin that enables you to achieve the best possible profitability.

This margin depends on the type of product you sell and your sector. It can vary from 7% to 50%. The higher the margin, the more profitable your online store.

Find out more about the KPIs you need to follow in e-commerce, to maximize your success.

3- Value-based pricing

This indicator is based on the value perceived by customers, to define selling prices. Do you know what your brand equity is? Are your products perceived as high-end, mid-range or low-end? How do consumers describe the quality of your products?

Based on the answers to these questions, you can determine value-based pricing. The more upscale and qualitative the brand is perceived to be, the higher the prices can be.

To take things a step further, you can also adjust your prices according to customer demand. This is known as Yield Management. This technique optimizes stock levels and profit margins, based on customer demand (which also depends on perceived value!).

4- Dynamic pricing

This strategy involves adjusting prices in real time, using predictive algorithms. They take into account numerous factors, such as customer demand, inventory, sales seasonality, promotions, economic trends, etc

To implement dynamic pricing, complex software is required. Prices then become flexible and evolve in line with the market. This strategy is ideal for maximizing profits, but if you're just starting out in e-commerce... Beware of costly solutions!

5- Penetration pricing

This method is often used by new e-tailers. It involves offering a low price to attract customers and "penetrate" an existing market. The seller then gradually increases the price over time.

Over time, market share is built up and products become better positioned. However, this practice is not immediate: it requires a great deal of patience!

6- Skimming pricing

This strategy is the opposite of the previous one. Whereas penetration pricing consists in gradually increasing the price of products, skimming allows you to lower prices over time. The aim of skimming is to set a high initial price, in order to attract customers known as "early adopters".

This type of customer is ready to pay a high price to benefit from a product quickly. Then, over time, products lose their value: it becomes necessary to adjust their prices downwards, to continue generating sales and profit.

How to choose the right pricing strategy?

Are you hesitating between different pricing methods? Don't panic! Here are our key tips for successfully carrying out your e-commerce project. They'll help you make the right choice, then adjust your strategy over time... to generate maximum success!

Know your market and your customers

A "good" strategy is always based on "good" data. And that data comes first and foremost from your customers' behavior: what are their preferences? Their demographic characteristics? Their buying behavior? Price sensitivity?

All these elements will help you to better understand how your customers perceive the value of your products. You'll then be able to propose pricing that's advantageous for your customers, and relevant to the rest of the market, to set you apart from the competition.

Evaluate costs and margins

Beyond customer and market analysis, the second factor to consider is your costs and margins. List your various production, transport, storage and customer delivery costs... as well asthe commissions charged by marketplaces, if you choose to sell on a platform like Rakuten.

For example, at Rakuten, our rates are adapted to your needs and the value of the item sold. Ideal for greater profitability!

Click here to discover our rates.

Experiment, test, iterate!

There's no such thing as a perfect pricing strategy. To find the method that best suits your products, your market and your customers, we advise you to experiment with different approaches. Dynamic pricing, pricing based on competition or added value, penetration strategy..

Remember to analyze the data from each strategy tested in real time, to adapt according to the results obtained. This experimentation phase can take several months, and that's perfectly normal. Take the time to test, measure and iterate.

Test approaches such as dynamic pricing, competition-based pricing or value-based pricing to assess their effectiveness. Analyze the data in real time and adapt your strategy according to the results.

To adjust your strategy effectively, you'll need to measure the right performance indicators. These include conversion rate, profit margin, sales over a given period... Compare all the KPIs obtained, if you are testing different pricing methods.

Implement promotions and discounts

Promotions, sales, discounts... Reducing the sale price during a given period is effective not only for increasing sales in the short term, but also for attracting new customers. It also helps you sell off excess stock. An ideal operation to stimulate growth!

Promotions can take many forms:

• Sales: these discount periods generally cover a wide range of products on a fixed date.
• Launch offers : these special promotions are organized to coincide with the launch of new products.
• Group purchases: these discounts encourage the purchase of several items together, to take advantage of a discount.
• Flash sales: these major discounts on certain products over a short period of time are particularly effective in e-commerce. Flash sales are even considered a growth lever!

Whatever the nature of the promotion, be sure to round down low prices to the nearest decimal place, or to round up high prices to the nearest round. For example, a promotional item will sell better if it costs €20 or €9.99, rather than €21 or €9.35.

A final tip: for easy promotions and extra discounts... Use Rakuten Coupons and Rakuten Points, if you sell your products on our marketplace!

Rakuten Coupons are discount coupons valid only on your products.

They enable you to gain instant visibility on our platform: your ads that benefit from Rakuten Coupons are automatically placed in strategic Rakuten locations, such as the Rakuten Deals page.

Rakuten Points are additional discounts you can offer your customers, without affecting the face price of your products. Rakuten Points are available to Club R members, who can receive up to 20% extra discount on your products. Ads benefiting from additional Rakuten Points discounts are also featured on the most attractive positions on our platform.

In short, our marketplace is home to over 12,000 professional sellers, free to set their own prices and offer their customers exclusive promotions on their Rakuten e-shop. 13 million loyal, regular buyers are just a click away. Perfect for making your first sales quickly... and growing your online store, directly from our marketplace.

So, are you ready to embark on your e-commerce adventure?

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by Haro Valentin

Second Hand: Key Benefits and Tips

The second-hand market is booming. It's worth over 128 billion euros worldwide (source: Tripartie), and more and more buyers are turning to this type of product. After reading this article, you'll know all about second-hand goods, their advantages and how to make the most of them.

What is second hand?

Second-hand products, also called pre-owned or refurbished products, are products that have already been owned by a buyer and are being offered for sale again. In short, we give these items a "second life" by enabling them to be used again by a new buyer.

More and more consumers are turning to pre-owned products every year. In 2023, 52% of French people planned to give second-hand items as Christmas presents, compared with just 20% in 2021. Online sales sites and marketplaces are the preferred place for these purchases. According to Fevad, 45% of online shoppers bought at least one second-hand product in 2023.

These items are therefore rich in opportunities, and many retailers are well aware of this. In fact, 29% of them were already offering second-hand products in France in 2023(ACSEL barometer, 2024).

Advantages of refurbished products

Second hand products offer many advantages, both for sellers and their customers:

Second hand advantages for customers

• Cost savings: these products are generally less expensive than their new equivalents;
• Quality products at lower cost: the lower price allows consumers to discover brand-name or higher-quality products, which the new price might put off;
• A wider variety of products: buying pre-owned allows access to items that are no longer on sale. This is particularly true of fashion items, whose availability is limited in time depending on catalogs;
• Reduced environmental impact: buying a refurbished item reduces its impact at every stage (production, transport, packaging, etc.). What's more, buying second-hand extends the life of products, which drastically reduces the volume of waste generated.

Second hand advantages for sellers

• Better margins: second hand products often generate higher margins, especially on refurbished or reconditioned items. In fact, the cost of putting them back on sale is generally lower than their production cost;
• Attract a new customer segment: as we saw earlier, second hand market is booming, and new types of customer are emerging. Selling this type of item is a way of attracting this clientele;
• Improving brand image: consumers are increasingly aware of brands' eco-responsible initiatives. 72% of French people say they choose environmentally-friendly products (Fevad, 2024). Giving a second life to your products can therefore become an asset for your brand image;
• Better inventory management: putting back on sale products returned by your customers, or unsold items from the previous season, is a good way to limit your inventory while generating additional sales.

 

How can I sell pre-owned products online?

To sell pre-owned goods online, you have several options:

• Create an e-commerce site: a site dedicated to your products, which you can configure and customize as you wish. This option gives you the advantage of flexibility, but requires significant investment (site construction and maintenance, audience development, search engine optimization, etc.);
• Join a marketplace: your products are sold alongside others on a virtual marketplace. This option has the merit of limiting the effort required on your part for technical aspects and product promotion (the platform takes care of this). What's more, it allows you to benefit from the reputation of the chosen marketplace, making it easier to reach a large number of customers.

At Rakuten, you can combine both approaches. In fact, becoming a Rakuten seller allows you to create your own E-Shop on our marketplace, a fully customizable space dedicated to your store. This means you can keep control of your brand and customize your visuals and customer experience to your heart's content.

Once you've made this choice, it's essential to adapt your strategy to selling second-hand goods online. Consider the following elements in particular:

• Product selection and evaluation: Identify items that are likely to be resold, whether they are returns, end-of-series items, reconditioned items, etc. Make sure that these products meet customer expectations. Make sure these products meet your customers' expectations.
• Reconditioning and reconditioning: If necessary, carry out repairs or reconditioning to ensure that products are in good working order and appearance before they go on sale.
• Effective presentation: Present your products attractively on the e-commerce site or marketplace of your choice. Use detailed descriptions, quality photos, and highlight the economic and environmental benefits of these purchases.
• Customer service: Offer quality after-sales service, with return and warranty policies adapted to second-hand sales, to reassure potential buyers.

Second-hand, at the heart of Rakuten's DNA

At Rakuten, second-hand is a historic pillar of our growth in France, and an essential marker of our identity. Today, one out of every two products sold on our marketplace is refurbished. We have more than 50 million pre-owned product references, and their sales are growing fast. During Black Friday 2023, for example, 43% of products sold were second hand.

To encourage our customers to turn to these products, we have also created the Vision'R badge, a system that rewards second-hand purchases. We were also keen to remove disincentives to the purchase of refurbished products. Our CeRtifié reconditioned program and our buyer protection guarantee customers quality, functional products. These initiatives enable our sellers to reach more and more customers, for the benefit of all.

Do you sell second-hand products, or would you like to start doing so? Then don't wait any longer! Join our 12,000 sellers and embark on the Rakuten adventure!

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by Haro Valentin

How to calculate your e-commerce shipping costs?

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by Haro Valentin

Marketplace or dropshipping: which model to choose?

In the e-commerce ring, two key concepts clash. On our left are marketplaces. On the right, dropshipping.

But are these two models (really) vying for the attention of online shoppers? What are their differences? Are they complementary? And above all, should you choose marketplace or dropshipping to sell your products online?

Follow the guide, and find out all the answers from Rakuten in this article. On the program:

• Marketplace and dropshipping: definition
• Marketplace vs dropshipping: what are the differences?
• Why choose the Marketplace model?
• Dropshipping and marketplaces... How can they complement each other?

Marketplace and dropshipping: definition

What is dropshipping?

Dropshippingis a form of e-commerceinwhichthe seller has no stock of products. The system is simple: a customer places an order on an e-commerce site, which then transfers it to a wholesaler (supplier). This supplier then ships the goods to the consumer.

In this system, the seller is merely an intermediary. He does not handle inventory management or shipping. However, he remains legally responsible for the sale of products and commercial transactions.

Very popular in recent years, the drop shipping market was estimated at around $128 billion. Now booming, it should reach $301.11 billion by 2024 .And according to forecasts by Grand View Research, dropshipping is set to continue expanding: annual growth isestimated to rise by 23% between 2023 and 2030 .

What is a marketplace?

Amarketplaceis an online platform that facilitates contact between buyers and sellers .On this multi-seller site, brands can sell their products or services online, usually for a commission or monthly subscription fee.

The system is as follows: merchants create an e-shop on the marketplace to sell their products. They manage inventory and order dispatch. Some marketplaces, such as Rakuten, also offer tomanage logistics, thanks to the Rakuten Fulfillment Network .

In other words, the marketplace is a large digital shopping mall. Each store inside represents a partner vendor. Visitors (or web users) can stroll from store to store... without disconnecting from the marketplace.

Does this business model appeal to you? You're not alone. More and more e-merchants are choosing to sell their products through a marketplace, to gain greater visibility, multiply sales opportunities, secure transactions and simplify logistics processes.

The results? In 2020 alone, marketplace sellers increased their sales by an average of 24% on this channel. Growth was twice that of e-commerce (according to a Mirakl study, 2021).

Marketplace vs dropshipping: what are the differences?

1. Bringing buyers and sellers together

In dropshipping, this is the e-merchant's mission: to create a website, promote his products... and attract buyers. Although the stock of goods is released by the suppliers, it's up to the distributor to sell the products, from their own website. Marketing costs are therefore higher than with a marketplace.

A marketplace, on the other hand, facilitates the relationship between buyers and sellers. Internet users can discover different e-shops in a single location. Rakuten, for example , has 13 million loyal buyers. All e-tailers have access to this large-scale community, to boost their sales!

2. The players involved

Dropshipping and the marketplace are two tripartite models... but they don't involve the same buyers!

On the one hand, dropshipping involves a seller, a supplier and buyers. The seller sets the selling price, based on the purchasing costs negotiated with suppliers.

On the other hand, a marketplace like Rakuten involves a platform (or operator), third-party sellers and buyers. It's the sellers who manage their offers, prices and sometimes even logistics. Whether it's a B2B or B2C marketplace, the players involved remain the same.

3 . Customer acquisition costs

Customer acquisition costs are a very important e-commerce KPI. The higher this cost, the more the company has to invest to attract customers to its e-shop.

Dropshippers are considered to have a higher acquisition cost. Indeed, e-tailers need to invest in marketing, and mainly in social ads, to attract traffic and generate sales on their store.

On the other hand, marketplace e-tailers benefit from a strong audience. At Rakuten , 15 million unique visitors visit our marketplace every month. Sellers benefit from this continuous flow of customers to their ads, and save money in the process.

Example of an ad on the Rakuten marketplace

4. Logistics

Drop shipping doesn't always get good press in the eyes of consumers. One of the main reasons? The lack of transparency in logistics. Indeed, many buyers purchase a product without knowing that the sender is not the brand, but a supplier (often located on the other side of the world).

Suppliers ship products in the distributor's name, giving the impression that the product comes from the distributor. Delivery times are generally long.

Conversely, in a marketplace, the seller ships the product directly to the customer. Logistics are simpler and more transparent. With some platforms, such as Rakuten, e-tailers can even outsource logistics, on a long-term basis or for more occasional needs .

Our tailor-made logistics service supports your e-commerce expansion, without compromising customer delivery times. With Rakuten Fulfillment Network, 99.8% of orders placed before 2 p.m. are delivered within 24 hours, to satisfy even the busiest shoppers!

5. The business model

A drop-ship e-shop enables e-tailers to collect the total amount of orders placed. They then pay their suppliers. The dropshipper's profit margin is the difference between the purchase price and the selling price. Onaverage ,the profit margin varies between 45% and 65%, depending on the nature of the items sold and supply conditions .

In the marketplace, the business model is as follows: the marketplace takes a commission on sales by third-party sellers, in addition to any other fees (registration fees, subscriptions, sponsored links).

At Rakuten, our 12,000 sellers can choose between two offers :

• The starter pack, free with commissions starting at 14%
• The expert pack, €49 per month with commissions starting at 8%

Our first freemarketplaceoffer is ideal for getting started in e-commerce :

"The Starter Pack aims to facilitate access for small businesses, looking for a complementary audience, to the Rakuten platform, its ecosystem of services and its community of active members. It's in line with our promise of 'e-commerce that puts everyone on the same page', whether you're a young pure player new to the market or a long-established local business", explains Matthieu Denime, Sales Director at Rakuten France.

6. Customer service

Late delivery? A problem receiving a parcel? A question from a buyer? All these situations require the intervention of an e-commerce customer service department. In fact,itisestimated that 5 out of 10 French customers contact a customer service department for a question or an update on their delivery or order (source: Essendex survey, 2023).

In dropshipping, the distributor manages customer relations and customer service, including returns, which it then passes on to suppliers. In many cases, a contact form is set up for after-sales service.

On digital marketplaces, third-party sellers also manage returns and after-sales service. However, if they choose a marketplace like Rakuten, they can entrust us with the management of after-sales service. Rakuten Fulfillment Network takes care of resolving any logistical problems encountered by consumers. Meanwhile, sellers can concentrate on what they do best: selling.

Why choose the marketplaces model?

Ready to embark on your e-commerce adventure, and join the 207,000 online stores in France? Here's our advice on how to set up your online store safely: opt for the marketplace model to develop your e-shop. And if you're wondering "why choose the marketplace model?", here are our answers:

1. High visibility

When you join a marketplace, you're not starting from scratch to find your first buyers. On the contrary: you benefit from an already established reputation, which makes it easier to build your brand image and sell your products.

For example,Rakuten attracts 15 million unique visitors a month and 13 million recurring buyers who are members of Club R. Ideal for our 12,000 professional sellers!

2. Transparency and trust

Unlike dropshipping, marketplace customers know where their products come from. As a seller, this makes it easier to build a relationship of trust, based on transparency. This trust is the foundation for greater customer satisfaction, which in turn increases customer loyalty.

Good news for e-merchants in the marketplace, who can then make trust rhyme with growth: a 5% increase in the loyalty rate can lead to an 85% increase in profits, according to a Harvard Business Review study.

3. E-commerce highlights

Selling your products on a marketplace means taking advantage of a number of highlights, which increase traffic and sales. Infact, marketplaces organize sales events according tothe seasonality of their sales: sales, Black Friday, Christmas, Mother's Day, Valentine's Day... What's good for e-tailers at these key moments? Promotional efforts are managed by the marketplaces!

To make sure you don't miss any key dates, and to optimize your online sales strategy... Discover our 2024 e-commerce highlights guide .

4. Ongoing adaptation and monitoring

When you choose to sell on a marketplace, you benefit from total flexibility. You can quickly add new offers, enhance your bestsellers and adapt to market trends. And if a product performs less well? You can remove it in just a few clicks.

You're the captain of the ship. You navigate, you make the decisions... But you're not the only master on board! If you need advice or support to improve the quality of the service you offer your customers, some platforms like Rakuten put a dedicated team at your disposal.

At Rakuten, your store is monitored by an e-commerce consultant, who is on hand to share advice and help you boost your sales over the long term .

5. Healthy competition between sellers

On a digital marketplace, third-party sellers set their own prices. This enables dynamic updating of offers, in line with market variations. The result? This flexibility ensures constant competitiveness and rapid adaptation to changes in demand.

In order not to hinder this healthy competitiveness between the players on its platform, Rakuten has a bias: unlike other marketplaces, we don't sell our own products. By choosing a marketplace like Rakuten, you choose to sell freely... without competing with our platform, which hosts your e-shop. Our efforts are dedicated to showcasing your products, to guarantee your success.

Dropshipping and marketplaces... How can they complement each other?

Are dropshippers really the enemy of marketplace e-tailers? At Rakuten, we believe it's possible to bring together the best of both worlds. That'swhy, unlike many marketplaces, we allow our sellers to practice dropshipping, under certain conditions .

The main condition is the existence of a legal entity. This is essential to enable third-party sellers to benefit from the advantages of our marketplace, and to build maximum trust, especially with our 13 million loyal buyers.

So, whether you're a professional dropshipper or not, you now know which lever to use to launch your e-shop: a marketplace like Rakuten. By opting for a 2.0 marketplace, youbenefitfromincreased visibility, optimized offermanagementanda relationship of trust with customers .

With Rakuten Fulfillment Network, you can even outsource your logistics. So, are you ready to enjoy rapid, sustainable growth online? You're just one click away from all these benefits:

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by Haro Valentin