Ecommerce is not built around merchant net profit - that makes it an industry in need of a revolution
Currently the ecommerce industry is not focused on delivering merchant profit. Channels such as Google, Facebook and subsequent Service Providers have no actual vested interests in the merchant's profit.
As the merchant is the one paying everyone's bills - if the aim of the ecommerce industry is not merchant profit - then it is an industry built entirely in the interests of the wrong people.
Ecommerce needs a new “MERCHANT FIRST” approach built around merchant profits. How is this achieved?
Every digital person in ecommerce must understand Merchant Profit and Loss
A 'MERCHANT FIRST' Approach
Step 1- All parties acknowledge that ecommerce is about merchant profit
An incredible thing about ecommerce is that most digital people do not understand a Profit and Loss account. They do not think in terms of Merchant Profit and Loss.
If business is about profit - then it follows that ecommerce is about profit. If all parties agree that ecommerce is about merchant profit then it provides a foundation for a ‘MERCHANT FIRST’ approach.
Merchant Profit is the true metric in ecommerce
Step 2- All parties agree to a common attribution model for Channels and Agencies
When everyone accepts that Merchant Owner net profit is the true metric of ecommerce it creates is the clear starting point to solve ecommerce.
If we understand channels simply produce sales at a cost to the merchant - then we can totally de-skill these complex services simply by their results.
An agreed common attribution model allows like-for-like comparison and reporting - this provides the missing performance and profit contribution information to rationalise Service Provision.
Everyone is a COST to the Merchant Owner
Step 3 - A Service Marketplace built on profit delivery
A Service Marketplace has the power then to completely deskill Digital Services where Merchants can choose and measure services based on their returns.
A Service Marketplace brings services like PPC and their providers together where they can be tracked, benchmarked and openly traded by merchants based on performance. PPC simply then becomes a sale with a cost, giving the necessary visibility to commoditise these complex skills.
Does a Service Marketplace guarantee every merchant will make profit? No, but it means that ecommerce becomes rational and is centred around merchants and their profits. That is a start point for a new type of ecommerce.
TRACK, BENCHMARK and TRADE Providers and Channels based on performance
Conclusion
Ecommerce is currently consciously and unconsciously rigged against the Merchant, in the sense that Channel and Service Provider's own profits are the aim of these participants.
A “MERCHANT FIRST” approach has the power to change how ecommerce works. Three simple steps can rebuild the industry around Merchants.
IRP have always believed in that merchant profit is the only ecommerce objective. MERCHANT FIRST profit-based technology and services are the future of ecommerce.
Accounting for Ecommerce | Attribution | Market Data | Service Marketplace
The IRP Service Marketplace will be fully operating in Q1 2023
