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The 113% solution — how to accelerate e-commerce growth
Samsung launches a new digital sales platform with IBM Consulting
With over USD 200 billion in annual sales, Samsung Electronics — the flagship of South Korea’s leading conglomerate Samsung Group — ranks first on the list of South Korea’s top 500 companies. From mobile phones and devices to digital TVs and home appliances, Samsung dominates the consumer electronics marketplace in its home country.
However, until recently, this dominance did not extend through key channels of Samsung’s sales structure — its South Korean e-commerce platforms.
For years, Samsung built and operated a portfolio of websites to market its wide variety of products directly to consumers, businesses and employees. Each website was managed by a different vendor organization. But as the websites grew and offered more product categories and items, so did the cost and complexity of managing these platforms.
In addition, the performance of the business-to-employee (B2E) website was not meeting expectations. “The Samsung employee e-mall was very slow and clumsy to navigate,” says Minjung Kim, E-store Planning Member at Samsung. “In fact, it was hard to say that the site actually was an e-commerce mall. Basic operations such as changing banners and registering products required too much lead time. And in the case of our B2B site, we also had issues with paying commission fees because the site was hosted by a third party.”
“Our goal was to increase the revenue generated by our e-commerce sites by improving the customer experience,” says Daeho Na, Platform Team Member at Samsung. “The legacy systems were not able to meet the expectations of our South Korean users, so our team decided to build a brand new, unified digital e-commerce platform.”
113%
In the first year, 113% increase in B2C e-commerce revenue from USD 155 million to USD 330 million
On time
Met an aggressive development and delivery schedule by being on time and managed changes and updates cost-effectively
As Samsung added B2B, B2C and B2E e-commerce platforms, it also built a roster of vendors to develop, maintain and update each website. Platform vendors worked independently of each other and individual platforms operated as standalone entities.
While Samsung’s established e-commerce platforms became more complex and more difficult to manage, the dynamic e-commerce marketplace continued to change rapidly. More consumer electronics competitors came online and vied for Samsung’s customers. In addition, Samsung increased the tempo of new product launches and marketing campaigns, which required website developers to refresh content faster.
Samsung’s existing hybrid environment was not built to run at the speed required to compete and grow sales in South Korea’s hyper-competitive e-commerce arena. Maintenance response times were slow and Samsung incurred charges from vendors when updates were made. As costs increased and operational flexibility decreased, Samsung platform managers began to explore other options.
Samsung managers concluded that their e-commerce platform vendors were more interested in implementing the latest technologies than improving the website visitor experience or boosting sales performance. “They were focusing on new technology to expand their service scope, but this went too far away from the core of e-commerce business,” says Na.
While the website vendors dwelt on the tactical aspects of technology, Samsung’s platform managers were focusing on an overarching e-commerce strategy to drive increased customer engagement and sales revenue. “E-commerce should focus on increasing the number of times customers visit our websites and make purchases,” says Na. “This was the strategic approach that we needed to follow for Samsung’s e-commerce platforms.”
To review options for transforming its e-commerce business, Samsung conducted a thorough evaluation of vendors. “We wanted a vendor with proven experience on e-commerce development and operation,” says Na. “IBM was selected because they grasped our strategy and suggested that we build an integrated platform apart from our legacy system. None of the other competitors had such an approach or system in mind.”
With IBM® Application Management Services proving the operational expertise and IBM Consulting providing strategic input and insights, Samsung combined its digital marketing platforms under a single e-commerce platform to serve the key South Korea market. Throughout the process, Samsung’s managers appreciated IBM’s assistance in unlocking more value from existing and emerging technologies to deliver long-term business impact.
“Another reason why I chose IBM for this transformation was its price competitiveness,” says Kim. “But the major reason was IBM’s commitment to the delivery due date. Internally, we believed that this would be an impossible schedule if IBM was not on the project.”
In addition to consulting and application management services, IBM also provided hybrid cloud management services through IBM Hybrid Cloud Solutions. Samsung’s e-commerce infrastructure was deployed across all of its on-premises and cloud environments, using a comprehensive and consistent approach for development and deployment.
In addition to meeting an aggressive delivery schedule, Samsung was looking for a vendor that could make updates to platform content quickly, so the websites could be responsive to market demand and continue to provide engaging user experiences.
“IBM offered the flexibility to make changes, an attitude that the previous vendors did not have,” says Kim. “The biggest advantages of working with the IBM team are their agility and dedication to cost-efficiency. They always align with the client’s key performance indicators.”
During the first year of operation, sales generated by the new, unified Samsung.com platform more than doubled. B2C e-commerce sales grew from USD 155 million to USD 330 million, a 113% increase. Success factors contributing to increased sales performance included a much-improved user experience, the ability to make changes and updates to content quickly and streamlined management through a central operational structure.
“The Samsung and IBM members of the team worked very hard to deliver this outcome,” says Kim. “IBM stabilized the operation at an early stage, and it was the first time where we saw remarkable improvements made at the contact center.”
Samsung employees were especially pleased with their new B2E platform. Positive feedback based on employee user experiences was shared on Samsung’s internal bulletin boards.
As is common with many organizations experiencing significant changes, some stakeholders expressed initial concerns with the scope and scale of the transformation. “For example, there was a negative stance from one of the biggest distributors when we made the changes,” said Na. “However, they completely reversed their position when they saw how much the revenue increased. The most important contribution made from IBM is proven with the revenue growth.”
As a result of designing and developing a modernized and flexible e-commerce infrastructure, Samsung is well-positioned to continue growing sales in South Korea through its B2C, B2B and B2E channels. The Samsung-IBM team will continue bringing innovative ideas to the e-commerce marketplace, enabling Samsung.com to provide users the merchandise and digital experience they expect from a market leader.
At the January 2022 CES trade show in Las Vegas, Samsung announced an initiative to build a more sustainable, customized and connected future expressed by the theme, “Together for Tomorrow.” During the next year, Samsung will roll out new products to help consumers make smart home experiences more seamless and the Samsung.com platform will play a prominent role in showcasing and selling these products.
“To support future growth, IBM has enabled us to add modernized e-commerce features such as live commerce and group deals, which have been great for us,” says Kim. “We expect IBM to lead and continue suggesting more industry-leading trends in e-commerce.”
Founded in 1969, Samsung (link resides outside of ibm.com) is the chief subsidiary of South Korea’s Samsung Group and the largest electronics producer in Asia. Samsung has three business units: Consumer Electronics, IT and Mobile Communications, and Device Solutions. The firm has over 113,000 employees in South Korea and is headquartered in Suwon-Si.
Footnotes
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Produced in the United States of America, March 2022.
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