Where is e-commerce heading: the Scallium team organized a zoom conference for retailers

At the end of October, we met online with representatives of the largest retail companies in the CIS. We discussed the maturity levels of an e-commerce business and the possibilities of transformation into a marketplace.

Our special guests were:

1. Andrey Sushkin, Development Director of ParkTechno, the wholesale online store of electrical products. He described how their business changed into a hybrid model and talked about the role of PIM Scallium in this model.

2. Igor Chernov, CEO of the Russian furniture marketplace "Дизайн Склад" — Design Sklad. He also showcased his e-commerce project and shared his opinion on why a marketplace is not a way to make money.

3. Andrey Pavlenko, CEO Scallium described the stages of e-commerce development.

Below are some relevant points from our discussion.

5 classic levels of e-commerce development

Andrey Pavlenko, CEO Scallium

There are 5 classic levels of e-commerce development. Today, few businesses use any of these models in their pure form. Most often, companies are in the traditional e-commerce stage, but at the same time, they have the characteristics of their next transformation - so they are a hybrid business.

For example, the system marketplace model looks optimal, and even niche players try to use it in one form or another. Moreover, precisely due to their niche and hybridity, they can compete with the existing top marketplaces for vast product profiles.
Where is e-commerce heading: 5 e-commerce development levels

Andrey Sushkin, Development Director of ParkTechno

A marketplace is such a difficult task for our business. A hybrid model - that's our story. We have our goods and our supplier's products. We were faced with the need to create many product cards quickly and send them to various channels. It is not efficient to create product cards for the same SKU in each channel. The accounting system did not suit us in terms of speed. Therefore, we started to implement the Scallium PIM.

PIM enables the standardization of product information and data transfer across all third-party sites in real-time. The need for this functionality does not depend on the number of SKUs; it can be interesting even with 100-200 product units.

As for the marketplace, this model is not entirely behind the scene for us. Perhaps we will come to this format in the future. But for now, it seems to be more of a model for the mass market. We try to offer something that cannot be found on marketplaces. For example, we offer expert consultations as an added value.

Product content distribution

Andrey Pavlenko, CEO Scallium

I'd like to add about the importance of product content distribution. Any PIM system should be able to:

  1. Collect and consolidate data on goods from different sources;

  2. Enrich this data. E-commerce needs rich content like videos and streams. A simple product description is not enough anymore.

  3. Distribute information through different sales and advertising channels. PIM must give each channel the information it needs without unnecessary details.

Given the above, it can be argued that PIM is an essential system for companies at any stage of development. And for marketplaces, this is one of the primary and central components of the IT structure. But it is important to understand that a marketplace is not only the technical side. A marketplace is an IT platform plus marketing.

Igor Chernov, CEO of the Design Sklad marketplace

The marketplace as a model is not a way to make money. This model is one of the most challenging options for profit growth because administration and marketing costs increase, too.

But a marketplace is worth launching to grow a specific business metric. In our case, this metric is conversion. We have outlined the path of our business development through conversion growth. That is, we need to provide the online buyer with more assortment and more choice.

One way or another, a marketplace is a way to get high-purchasing frequency clients. But initially, there should be a core audience — people who have already shown interest in your product. These clients are ready to overcome some obstacles to buy this product again. We had an elementary site at the start. It was quite difficult for clients to order online. But this did not stop them, so people called and placed a live order by phone.

Therefore, you need to work on the client's attraction first and then automate processes. Otherwise, you can build a strategy and find out the audience demand something completely different.

Conclusions. Where is e-commerce heading?

A marketplace is marketing plus IT.
A pure marketplace is not so common, but most companies expanding their e-commerce have some marketplace characteristics.
The marketplace model will not bring quick profits, but it will help solve urgent problems connected with scaling up a business online.
PIM system is the central element of the marketplace or e-commerce IT system.
And the most important: Where is e-commerce heading? We would say it is developing through the marketplace model to ecosystems (see maturity level table above).

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