Big Bet: Scaling online retailer’s footprint to third-party marketplaces increases revenue, expands customer base
A vice president of digital commerce at a global technology company needed to expand online distribution to increase revenue. Although the company sold directly to consumers through their own online and physical retail stores, it needed to grow revenue through new digital channels, and do so without compromising their brand.
An upfront strategic analysis revealed that high volumes of inactive and liquidated inventory were being sold for pennies on the dollar to third-party liquidators, which then sold to consumers through sales channels that offered a suboptimal brand experience.
By driving a cross-organizational strategic planning process for the leader, we identified an opportunity to sell the inactive inventory through third-party marketplaces rather than liquidators. This approach would enable the company to increase monetization, protect the brand, and reach new customers.
Solution
We evaluated and selected third-party marketplaces that would enable the company to get the most for inactive inventory while also protecting its brand. At the same time, our client could continue delivering a differentiated premium customer experience through its own direct channels.
To execute, we built a cross-functional team that developed and ran an end-to-end pilot program, minimizing impact to the company’s internal resources. The team incubated and continuously refined key processes—e.g., fulfillment, merchandising, customer service and technical integration of systems spanning the company, vendors and marketplace—until the business model was proven.
We successfully transitioned the execution model to internal resources by working with representatives from the company’s operations, marketing and finance teams to identify and address capabilities gaps.
Impact
The program drove significant positive impact. The company improved margin recovery of inactive inventory by 150% while also delivering a more consistent brand experience compared to traditional liquidation models. In addition, more than 90% of customers reached through the third-party marketplace represented net new customers for the company. The client continues to reach new customers and sell select products through third-party marketplaces, complementing their own global online storefront.
Insight
Success of the program demonstrated that highly capable PMOs within the Office of Chief of Staff of larger organizations are a smart place to incubate new business opportunities. A small, agile and interdisciplinary team under the VP/Chief of Staff who understands how the broader organization works is well equipped to validate and refine business and execution models.
Once proven, the Chief of Staff can assess and develop a plan to support the transition of implementation to functional owners across the organization long term. You can minimize risk and disruption to ongoing business operations by utilizing the best team at each phase of new business initiatives, e.g., incubation and experimentation vs. scale and efficiency.