[Strategy 3] To turn previously untapped consumers into customers, start by launching an e-commerce site.

This series commemorates the release of the book "10 Essential Rules for Digital Marketing Success: Easy-to-Understand Mechanisms for Creating Lasting Sales, " published by Dentsu Digital Inc. and authored by its top marketers.

Part 3 features an excerpt from Key Principle 3: "Start by Launching an E-Commerce Site to Acquire Consumers You Haven't Reached Before," specifically the section on "Mall-Type E-Commerce vs. Direct-to-Consumer E-Commerce."

 

Mall-Type EC or Direct-to-Consumer EC?

Many companies already operate e-commerce sites, but just as with physical stores, it's necessary to renew them to keep pace with trends. Furthermore, when appealing to new customer segments or proposing new consumption scenarios, launching a new e-commerce site is essential, much like developing a new business format.

Companies that have been successful tend to be attached to their existing brands, making them prone to applying their past successes to new e-commerce sites launched to capture new customer segments. Of course, bringing existing success to an e-commerce site isn't inherently bad. It's a matter of deciding which demographic to target and what products or services to offer them.

However, if you want to reach an entirely new demographic, you need a strong impact that completely changes the look and feel.

Furthermore, even within the same e-commerce channel, there are different store formats, such as "direct-to-consumer e-commerce," where the company handles all sales operations itself, and "mall-based e-commerce," where the company opens a storefront on an existing online shopping mall (Figure 1).

Figure 1: Classification of E-Commerce Channels

When launching an e-commerce site to target new customer segments, direct-to-consumer e-commerce requires the company to cover everything internally, from advertising expenses to infrastructure development like fulfillment.

Opening a store on an existing mall allows you to utilize the mall's existing infrastructure, keeping initial costs low. Well-known malls can also attract customers through their brand recognition.

However, many consumers attracted by the mall are fans of the mall itself, not necessarily fans of the individual stores within it. This is because a significant number of customers compare options within the mall and make a purchase by chance. Furthermore, the customer list belongs to the mall operator. To convert these customers into your own, you need to direct them to your direct-to-consumer e-commerce site.

It's not a question of which e-commerce channel is superior; rather, businesses should understand the characteristics of each and use them appropriately.

For instance, a store selling highly specialized products might thrive solely on its own e-commerce site, even if located on a back street, as customers will seek it out. Conversely, if the goal is to maximize customer touchpoints and boost sales, opening shops on various malls is a sound strategy.

However, if you aim to leverage the unique characteristics of e-commerce sites—unlike physical stores—to enhance brand loyalty, building your own direct-to-consumer e-commerce site is essential (Figure 2).

Figure 2: Characteristics of E-Commerce Channels

 

 

 

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