LR Physics has been providing an eCommerce framework to a wide array of large and small Manufacturers in North America and Europe. This eCommerce Marketplace Use Case covers all aspect of the return of investment collected after an end-to-end implementation.
eCommerce Marketplace Use Case

Goal of the eCommerce Marketplace

More than a mere additional route to market, the eCommerce serves as an omni-channel way to collect sensitive Data about Consumer behaviour and Market Products Basket.

To overcome Executive fears, LR Physics creates eCommerce pilots at a fast pace with a limited budget that will serve as Proof-of-Concepts. Once the Data are confirming the need of adding an eCommerce channel to the organization, we help scaling up operations and rolling out worldwide in a timely manner.

To achieve this, LR Physics implements the following features:

  • A Tax Legal Structure (LLC) with a Nexus: LR Physics invoices the end Customer and remit to the Manufacturer at each end of periods.
  • A Local Warehouse to store Buffer Stock and manage reverse logistics: We have local Fulfilment entities in North and Midwest USA as well as in Netherlands, Belgium and Spain. They average process 2000 order lines per day up to 10000 during high season.
  • An Industry standard eCommerce Framework: Depending on the catalog size, Magento or WooCommerce are being implemented to fast track the Marketplace. This implementation usually takes between 6 and 8 weeks.
  • A Customer Service Chat & Phone: LR Physics works with Dedicated or Shared Service, onshore, nearshore and offshore.
  • A 4 channels Marketing Team: While the Campaign Strategy is onshore, all the PPC, eMail Marketing and Affiliation Marketing involve offshore and freelancer resources.
  • A Data Science Analyst: LR Physics provides real-time Analysis indicators and regular.

eCommerce Marketplace Use Case Timeline

This eCommerce Marketplace Use Case covers our 4th B2B Marketplace implementation in 2015.

Situation before the eCommerce Marketplace

The Manufacturers were relying on Distributors to get their End Customers data. Most of the Distributors refrain from giving away their retail data as they are relying on the relationship and knowledge of their local market to survive.

Distributors collect between 20 and 30% of margin on the Retail Price based on the value-added service they give on Sales and Fulfillment.

Having the Distributor to arbitrage between the Manufacturer products and the competition implies a loss of opportunities for the complete range of products.

Total Turnover: 18 millions $, including 86% on Distributors and 14% on Direct Sales.

Situation one year after the eCommerce Marketplace

Marketplace Growth
(in K$)

The Manufacturers, empowered by the Marketplace, gets a better position to negotiate with Distributors to share their End Customers data. Having a Direct access to Data improve dramatically the Supply Chain’s inventory offer and implies a complete transparency on final prices and Distributor Margin.

Distributors still collect between 20 and 30% of margin on the Retail Price based on the value-added service they give on Sales and Fulfillment. Meanwhile their role gets limited to the logistic operations and their Sales staff have a broader range of products and Data insights about Customer leads.
==> The Marketplace has an indirect positive effect on the Distributor volume growth thanks to the improved Data.

Having the Marketplace allows the Manufacturer to pull inventory on the complete range of products. Analytics tools can allow easy Market Basket analysis, even in territories where the Products are not listed.

Total Turnover: 23 millions $, including 78% on Distributors (Growth: +16%), 8% on Online Sales and 18% on Direct Sales (Growth: +64%).

Risks & Constraints

Deploying an eCommerce Marketplace creates the following risks:

  • Sales Reps get overwhelmed by 5x to 10x more B2B leads – Mitigated by adding a better CRM process to the Organization.
  • Sales Reps and Distributors feel threatened by the Online Channel – Mitigated by an informational session on how the eCommerce will actually improve Volumes and Commissions.
  • Pricing are competitive and can cannibalize current Channels – Mitigated by setting a Price at the higher end. The goal of an online channel is NOT to cut price but to improve Customer Service.
  • Reverse Logistics and small quantity orders are not in the Manufacturing DNA – Mitigated by setting up an ad hoc Business Unit dealing with the eCommerce flow.