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Ecommerce glossary and concepts unpacked

Ecommerce sounds like a straightforward concept: commerce that originated electronically.

That said, the subject is anything but straightforward, and has come to encompass any number of subtleties regarding the shopfront, the relationship to the actual store (if there is one) the warehousing, the fulfilment process and even down to the payment methods used.

Here are a few terms and concepts to help you better understand the concept of ecommerce:

Spelling: the world is slowly but surely adopting the spelling “ecommerce”. Over the last decade, all sorts of hyphenations and capitalisations have been used, but in the same way that E-Mail and eMail is no longer used – now just spelt as “email” – E-Commerce or eCommerce is now just referred to as ecommerce. If it starts a sentence, it’s “Ecommerce”.

Omnichannel: implying “multiple sales channels”, this differs from the term “multichannel” because the goal is similarity and consistency between the channels. As an example, many retailers have added an ecommerce channel to their business but can’t/haven’t properly connected it to their legacy systems and as a result, vouchers or discounts or sales don’t work consistently across their channels.

Warehousing vs drop-shipping: some ecommerce businesses choose to warehouse stock locally and fulfil their orders quickly. This costs cash-in-stock, but achieves quick turnaround times, better stock visibility and usually favours high-service business. Alternatively, some receive an order only to then place other orders with the product suppliers and have them ship the product(s) on their behalf. This is called drop-shipping, and is sometimes valid for low-frequency stock, or particularly large volume stock, but is harder to achieve high-touch service as a 3rd party is responsible for both shipping and tracking the order. Often a hybrid model is best – fast-moving goods might be warehoused, and slow-movers ordered direct from suppliers.

Pure-play online: This would mean that the business is only operating online. Amazon was a pure-play online business until it opened retail stores and began experimenting with bricks and mortar stores. Takealot is currently still a pure-play online retailer. Inevitably, stores complicate the logistics requirements as stock now needs to move from distribution centres to stores, back again, and retailers often start using their physical locations to fulfil online orders.

Marketplaces: eBay was ones of the first online marketplaces, which facilitated orders between sellers and buyers. It managed payments between the parties, and eventually added buyer protection and a variety of tools for both buyers and sellers. Ultimately, these platforms rely on scoring the sellers and buyers to promote high-quality transactions, simultaneously discouraging scammers. In some cases, these marketplaces connect with courier companies to provide options to the sellers. Gumtree, bidorbuy, Takealot Marketplace, Facebook Marketplace etc. are all examples of these platforms, and this is appearing as a big trend for new businesses.

Dark Store: This term usually refers to the way a retailer who was already serving phyiscal retail from a Distribution Centre will choose to treat their ecommerce store. They create a “virtual store”, somewhere in a warehouse, which they supply and service in the same way as a physical store (in terms of forecasting and stocking). They fulfil their ecommerce orders from that store, emulating the purchase process of a customer walking in and transacting. This method can sometimes lead to out-of-stock situations because the store isn’t treated with the priority it requires.

B2B: Courier work used to imply a business-to-business transaction, and the term distribution was often used interchangeably. This might have involved stock being delivered from suppliers to warehouses, or to retail stores, but generally involved bulk goods. Certain assumptions could be made, that the receiving bay would be open during office hours, that there’d always be someone to sign for a delivery, and that the addresses were fixed and therefore predictable. Many of today’s couriers emerged from B2B background and have had to try to move their business models and logistics planning to handle B2C.

B2C: When compared to B2B, business-to-customer work is very different. If the customer is a business, it might look similar, but the density of delivery is likely to be residential, to individuals, of smaller value and higher volume variance. Trying to coordinate deliveries with recipients is challenging, and often highly dependent on planning, predictability, and communication to ensure successful first-time deliveries. B2C customers have typically higher expectations, and service and impression is very important. In an age of social media, it is usually B2C deliveries which are viciously punished online should those expectations be unmet.

As a result, various profiling should be done at the start of a B2C account to assess the risks associated with the target market, product mix, client mix and likely geography. Along with these risks, density studies will be conducted if historical order data is available to understand the impact of consolidation. Where B2B work usually centred in CBDs and industrial parks, B2C often sprawls across cities and suburbs with little to no similarity.

Click & Collect: Courier delivery isn’t convenient for everyone. Increasingly problems occur with gated security complexes, corporate mailrooms, receptionists etc. The issue is usually linked to getting a signature for the Proof of Delivery, when the actual recipient isn’t available, and the order “fails” because that signature is required by the sender. In this case, Click & Collect is a term for the parcel being left somewhere where a collection can occur at the receiver’s convenience. Online retailers who have physical presence will usually offer this as a store collection. (Mr Price stores have been very strategic with this, offering their in-store collections at extremely low prices).

In some cases, the overall experience suffers because neither the retailer nor the courier is actually involved for the final exchange with the client, and this can be disappointing if training or experience is lacking at the point of collection.

Players in the market include PUDO (operated by Courier Guy), Paxi (operated by Pepcore Group, located inside PEP stores) and Pargo, who are partnered widely across the country with many fuel stations and convenience stores. Aramex has the advantage of approximately 400 PostNet stores, which are available with terms and conditions to act as Click & Collect locations.

Pick-up Lockers: For similar reasons to C&C, customers might choose to have the parcel left in a locker. Usually this is at a secure/monitored location, and when the delivery is made, the receiver is given a pin/code via an app/mobile exchange. The parcel is kept in an appropriately sized locker until the pin is used to retrieve it. These have some advantages given their 24hr access, but present other safety challenges, and are expensive for providers to build and maintain. As a result, there aren’t a large number of offerings like this yet, but DSV and Makro have invested in this technology.

Platforms: Many different technologies are used to present ecommerce on the web/mobile devices. On one extreme are completely custom-made platforms which likely started as technology companies in the last decade (Yuppiechef being a good example). In these businesses, there are usually inhouse developers, programmers and IT specialists who maintain and service these sites. In some cases, this work may have been outsourced to a development agencies who then fulfil this service on behalf of the business.

On the other extreme are platforms which are in some way similar to Facebook: a retailer need only create a username, customise the homepage and upload some products. From there, the site is marketed and operated via the platform. Examples of this would include the three dominant SMME-size ecommerce platforms, called WooCommerce, Shopify and Magento. These are not the only options, but are far more prevalent than other platforms at present.

  • WooCommerce is opensource, and actually originated in South Africa. It is built on top of WordPress, one of the world’s leading content management/blogging platforms. Opensource software means that it can be downloaded and installed on a server for a customer, though it is also available as a hosted service in the cloud. As a result of this flexibility, many smaller, cost-sensitive or DIY-inclined business owners may have opted for this platform. It’s cost of ownership is lower than the others, and anyone could tweak or adjust the way the store works with no limitations.

  • Shopify is probably the most user-friendly, straightforward way to get an online store running. Because of this simplicity, many “new stores” might begin their life in Shopify until either limitations or pricing causes them to move. Many enterprise size stores operate on Shopify Plus, so it is up to the task of large stores, but its pricing is dollar-based and they have migrated many features into higher tiers, requiring larger monthly subscriptions, often causing smaller operators to change tack.

  • Magento is the larger, most enterprise-ready ecommerce platform of these three. It used to suffer from performance issues and as a result had a slower start than the other two platforms but has targeted the larger entities – for example Clicks Group.

There are many other platforms – including SAP Hybris, IBM WebSphere, Oracle ATG and Salesforce. These will benefit from massive feature sets but are usually deeply entwined with consultants and extreme costs.

Plugins: Nearly all platforms offer extensibility – meaning that by installing additional chunks of software called plugins, the features are expanded. These plugins can transform how images are shown or add additional comparison fields to the product pages – all adding to the actual user experience of the site. Typically, plugins add the functionality for payment gateways, address resolution, cart functionality, warehousing integrations and importantly, courier integrations.

Order information is usually available to all of these plugins, meaning that for a courier plugin, steps like waybill creation, submission to our systems and even order tracking can be done with relatively little effort.

Currently, Aramex has global plugins available for Shopify, WooCommerce and Magento, though because of regional nuances, the WooCommerce plugin offers the greatest functionality. Shopify also works, though because of the design of the plugin, live-pricing is only available on the highest tier of Shopify which means for many lower-tier clients, it’s not available.

There are efforts underway to provide localised plugins for Shopify, WooCommerce and Magento during the early part of 2021.

APIs: Standing for Application Programming Interface, the term refers to a piece of software which will allow communication from another piece of software. APIs allow different applications to share information, events, instructions etc. In the case of ecommerce, APIs would allow the exchange of order details for different purposes, including requesting quotes for shipping, or submitting order details for a new waybill, or enquiring as to the tracking information for an order. APIs can usually work in both directions, so order statuses can be updated by the courier for example.

Aramex has global APIs available, as well as local APIs which help to regionalise and add functionality specific to South Africa – particularly dealing with addresses.

Aggregators: This term is broadly referring to businesses which offer 3rd party “bidding platforms” for couriers, chasing lowest prices on the promise of volume. As an example, an aggregator might have relationships with 1000 merchants, and negotiates a group-based rate with a courier partner on the basis that “they could be eligible for all that work”. Several couriers might be on the platform on the same understanding, and when they submit rates for a given parcel, the various different quotes are displayed to the end user to make a choice. These aggregators tend to be very price sensitive, and often attract likeminded customers. That said, they can be fertile ground for finding growing, up-and-coming customers and potentially improving the relationship towards “value” and not just “price”.

  • UAfrica is a popular aggregator in Southern Africa, offering a level of pick/pack/fulfilment functionality which augments most ecommerce stores. For this reason, we are currently negotiating joining uAfrica’s platform. A first round of negotiation has already occurred and if it proceeds, will likely take place middle of 2021.

  • ScrubBill is a Cape Town based service – also an aggregator – though willing to partner slightly differently. They also offer pick/pack/fulfilment functionality, as well as data scrubbing and address validation, and we are in the process of integrating with them to provide options for their clients. This will also likely include Click & Collect options, which will be a great additional service to what most aggregators are able to provide.

Other international aggregators include ShippyPro, Shipify and Shippo.

Live Pricing: this refers to providing a price at the time of checkout, before the order has been placed.

This is tricky, since usually pricing is reliant (in part) on volumetric information, and at the time of checkout the parcel hasn’t been packaged yet, meaning that the volumetric might change. In general, this can be addressed with tiered pricing (2-5kg, 6-10kg etc), but in general for ecommerce, the concept of an “average delivery cost” is helpful, and should be discussed whenever possible. In this way, a flat-rate delivery charge would be charged for orders below a certain value, and either free or less above that value. On average, the charges would balance the orders, and it leads to far less admin for the retailer.

Notifications and communication: Customer expectations are forever growing. Because the geography spread means some customers are 5 minutes from the retailer, and others are literally 5 days away, the experience will vary. Social media has propagated the best-case scenario, and so the best weapon against expectations is to set them very carefully. Communication is key, and it’s important that right from the first contact with a client the realities of ecommerce are spelt out, and that along the way, clients are kept in touch with progress of the parcel. In some cases, the retailer will choose to handle all communication, in which case we need to keep their systems up to date. In other cases, they’ll want to have notifications enabled meaning we’re sending direct to customers. In any event, our tracking, OST and LOP accuracy information keeps this possible.

In addition, delivery and route information is critical – it needs to be accurate and complete.

2021-12-14T14:55:43+02:00