Retail Pricing Heroes: Hi, Tomas. We live in an era where consumers are still living and interacting in the physical world, but also largely interacting online via the digital universe. Online supermarkets combine the purchasing prowess of retail brick-and-mortar (supermarkets) with the convenience of the online store. In what aspects is big e-comm falling behind retail, and vice versa?
Tomas Jerabek: E-commerce has been on the Czech market for almost ten years now, and of course this industry has evolved at an extremely rapid rate within that time frame.
In the beginning, there was a lack of any retail competence and knowledge in almost everything, namely assortment, pricing, purchasing, warehousing, logistics, and so forth—and most importantly, there was a lack of any previous experience or understanding of it, precisely because it was a completely new segment with little inspiration to build on within the market.
Today, the world of ecommerce is completely different. E-comm, in general, has the ability to learn and shift quickly as a consumer market, and at the same time, it continues to be a very attractive business for people who have worked in traditional retail, and who have experience, but are looking for an environment where they can be more fulfilled. These new-era ecommerce professionals who came from traditional retail also continue to enjoy an e-comm environment where things are moving at the speed of light, where they can still very much influence the future of retail, and where they are not fighting the corporation at every turn…
RPH: How has the emphasis on additional efficiency to an already highly operational retail business model evolved?
TJ: Efficiency is absolutely critical in ecommerce. If you can’t manage and control costs, that’s really going to hurt your business. The push to cut costs in every process and every part of the company has become slightly obsessive over the past few years, and I mean that in a positive way. They say that every penny counts, and in e-comm this is twofold. It’s crucial that every single Czech Crown (I am speaking of Czech currency here, as it is in my case) of costs saved on a single customer order builds savings in the units of tens of millions of Czech Crowns annually. And the complexity is huge in ecommerce—you focus on every part of the process to see where it can be optimized, automated, and streamlined. For example, how many new customers you acquire and how you acquired them; how effective your marketing efforts are; total amount of retention costs; how you use technology and processes to speed
up the receipt of goods; how many times you have to pick up and deliver each item in terms of logistics before it reaches the customer; how you use AI and technology to control the full purchase process instead of human man hours and workforce; how many packaging materials and bags you need per purchase; how quickly you are able to load purchases into the delivery truck; how much downtime you have on your internet network; how efficiently you plan routes, and how many minutes and miles are between customers; automating customer complaints, and so forth… As you can see, there are loads of factors to correlate when you are evaluating time spent and total costs per time frame in each activity. And, you have other big topics in finance to evaluate, not to mention digitizing “paper” and the processes behind it, HR and how much it costs you to hire a new employee and collect feedback, how efficient you are in software development, and so on… I cannot emphasize enough how big of a consideration this all is.
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