Solving Ecommerce with a Service Marketplace

Unfortunately for online businesses making money can be the exception – specifically when teams are not organised to generate their owners profits. The IRP Service Marketplace sets out to solve this. 

After overseeing £Billions of sales for merchants to 170 countries – IRP have two fundamental beliefs about online teams:

1. ALIGNMENT of team interests and measurement of contribution to profit is more important than technology
2. A SERVICE MARKETPLACE can solve ecommerce performance with a quantitative data approach

This Whitepaper expands on these principles and explains how to deliver profit though a Service Marketplace.  Success then means profit and ecommerce is correctly set up in the interests of Merchant Owners . The MERCHANT FIRST approach can align teams, ensure performance and solve profitability.

Success through performance measurement

Success in ecommerce means PROFITS. Profits are created by sales growth at a fixed CPA% traffic spend.  This combined with acceptable product margins and operating costs deliver Net Profit.  Profit must be the shared goal of the Merchant Owner and their team. This is fundamental.

According to the Harvard Business Review, the first trait of a great team is "extreme visibility of individual performance". An ecommerce team is a sales team - merchants must have realtime visibility on performance and make the individuals aware of it:

1. Individual performance is measured by contribution to sales and profits
2. Bonuses should be uncapped to create aligned motivation with Ecommerce Managers 
3. Team performance should be rewarded to reduce internal friction

The ecommerce team must be measured based on profit contribution.

When a market exists - ecommerce failure stems from lack of visibility and control and an inability to measure performance & contribution to profits.

Measuring Traffic Channel Performance

Merchants must use a clear performance measurement system based solely on sales and costs. A consistent last click attribution model that is followed repeatedly solves ambiguity. The following example shows measurement of a company's Traffic Channels:

Table 1: 'Company A' example Traffic Channel performance figures

Benchmarking Ecommerce Manager Performance

To benchmark individual Ecommerce Manager performance you compare your team’s results with how the rest of the Service Marketplace is performing. This gives you the performance percentile as shown in the following examples:

Table 2: Example Ecommerce Manager ranking

Table 3: Example Facebook Service Provider ranking

Using data as detailed above you can achieve a Perfomance Ranking against the market and compare growth and CPA% to a peer group for a Service, Company or an Individual Role.

This measurement and competition is the way to encourage individuals and teams to perform at their best.  Where services like PPC may be intangible to business owners - profits and results are not.  Companies should pick Service Providers based on their performance from the IRP Service Marketplace.

How the IRP Service Marketplace solves ecommerce performance

A visiting Soviet Ambassador in London asking his British counterpart "Who organises the bread for London?" The answer was that the 'market' effectively organised the bread, and in a very resilient way. In the same way, when measurement is applied so that results can be compared and understood, a 'market' can organise the growth for companies in ecommerce.

IRP solves ecommerce with technology and a 'Service Markeplace' to deliver results, with visibilty and by continually measuring and comparing team performance.

The Service Marketplace then helps business owners pick the right players for the team.

Conclusion

The concept of moral hazard can be present in ecommerce. Merchant Owners bear all of the risks – and the counterparties win regardless of the profit outcome for the Merchant Owner.

At the root of this problem is a chronic lack of clear, profit-based information.  A performance Service Marketplace with correct alignment and attribution solves this and risk becomes shared. With this "MERCHANT FIRST" approach, nothing is left to chance and companies have a much higher chance of success.

Market competition helps every participant improve - from Merchants to Ecommerce Managers to Service Providers.  Competition drives innovation and performance to the benefit of all.