COVID-19 has had the most impact on the retail sector. High streets have been radically altered, with little sign of these changes slowing. As household brands transfer into the digital-only space and new digital-native brands emerge, X Commerce is evolving with a new retail landscape business will need to navigate successfully.
According to eMarketer, online retail sales in 2020 increased by a massive 35% compared to 2019. And according to Hootsuite and WeAreSocial, purchases from mobile devices account for over half (55%) of all online buys.
As online commerce is radically changing, the legacy definitions of E-commerce, M-commerce and omnichannel are being replaced with a more integrated approach. Here, X Commerce captures all of these channels into one streamlined whole. As retailing has changed, consumers’ attitudes and behaviour are also radically different from just a year ago. X-Commerce, then, is an evolution of the omnichannel approach but an approach that will have a more profound impact on the business-consumer relationship.
The shift to more online shopping will continue to expand. The pandemic has changed consumer shopping behaviour that is unlikely to revert to pre-pandemic levels. Speaking to Silicon UK, Mike McGuire, EMEA vice president of sales at Iterable, a growth marketing platform that enables brands to create, execute and optimise campaigns, says:
“The rise of E-Commerce, catalysed by the pandemic, isn’t going to subside. We conducted a survey last year that found that, even without COVID-19 considerations, the majority of respondents would still opt to shop online at least half the time.”
McGuire continued: “Consumers are more comfortable with digital retail than ever before. With a crowded market and consumer confidence likely to take a while to get back up to speed, retailers will need to ensure they are providing their customers with a unique experience, spanning across all digital channels, that complements the eventual return of in-person shopping.”
Steve Williamson, EMEA general manager at Acquia, also explained to Silicon UK how the retail space use would change. “With Apple’s upcoming privacy changes and Google’s decision to phase out third-party cookies, how consumer data is used by brands is set to change fundamentally. However, this presents a significant opportunity for retailers to develop consent-driven personalisation strategies in which data is voluntarily given to a brand to provide more targeted information.
“Customer Data Platforms (CDPs) which manage this wealth of first-party data will therefore become an integral tool for retailers. Via CDPs, retailers will be able to quickly interpret data and create customer segments and targeted campaigns, enabling them to serve contextual and relevant offers to consumers, and significantly enhance their digital experience.”
Williamson concluded: “In 2020, we saw brands focus on improving their capabilities on their digital platforms. In 2021, brands will want to build on this foundation and look to better understand their customer base through using a CDP. Having data insights to enhance your offering for existing customers can greatly enhance retention, which, as we know, is much more cost-efficient than attracting new ones.”
Interestingly, consumers are now – more than ever – driving how the digital retail landscape is developing. The Future of X Commerce report from Gladly is telling, revealing what consumer want from the online retailers they buy from. The top five requirements are free shipping (58%), free returns (46%), two-day deliveries (30%), extended returns (15%) and the ability to select a delivery day (14%).
Says Melissa Minkow, retail industry lead at digital consultancy CI&T, “While shoppers are giving retailers a bit more grace, brands that are able to serve in a quality, yet expedited manner, will be rewarded for exceeding consumers’ recalibrated expectations. From receiving a package on the same day as it was ordered, to returns being picked up from your home address without having to jump through re-packaging hoops, the real winners of the year ahead will be the ones who can promise a frictionless end-to-end shopping experience. We can expect retailers to get extra creative with their delivery methods, along with a doubling down on support functions such as digital assistants and machine learning to personalise customer service.”
Also, Steve Williamson, EMEA General Manager at Acquia, comments that retailers are now thinking in more detail about how technology can help them post-COVID-19. “Lululemon’s acquisition of exercise hardware brand Mirror is a prime example of a retail brand coming up with creative solutions to engage its customer base, diversify its channels, and bring the brand into consumers’ homes when they can’t visit in-store. As retailers recognise that their digital presence is integral to their success, we’re likely to see more deploying similar tactics.”
X Commerce is now a multifaceted approach to the whole retail supply chain. The pandemic has shown all enterprises that using the data and technologies they have to serve their customers better is their way to a sustainable future.
Businesses in the new digital retail space COVID-19 has created are also changing how they manage their operations. In their report, Gladly conclude the tools enterprises now use are radically changing: “Instead of OMS (Operations Management Suite) solutions, many start-ups are managing orders with Trello. Instead of investing in massive ERP (Enterprise Resource Planning) packages, many brands are opting to build their own by integrating best-in-class tools with smaller, bespoke toolkits. This means that brands spend less time worrying about employing developers, or specialist agencies, and instead focus on employing strategists. This is a phenomenon we’re calling ‘The Third eCommerce Modernity.’”
In their report, Unified Commerce: The Speed of Change, Broadleaf Commerce state: “The commodity in commerce is no longer limited to the goods sold or systems and processes that support transactions. The commodity of commerce is actually how quickly a retailer can change to meet the needs of the digital-age consumer. The commodity of commerce is the Speed of Change. Unified Commerce is not a destination to be reached. It is a mindset or state-of-being that consistently embraces and empowers rapid change — it is a journey.”
How business operates within the digital retail space, in particular, will increasingly rely upon data to guide their actions. Collecting masses of detailed information about customer purchases and preferences has, of course, become the norm for all retail enterprises. Research from KX reveals that this information will become even more vital post-COVID-19.
A majority of firms (90%) plan to increase investment in real-time analytics solutions over the next three to five years. Additionally, nearly two-thirds (64%) of organisations believe having access to real-time data is critical to making smarter business decisions. In comparison, over three-quarters (78%) say real-time data and insights create a competitive advantage for their business.
Perhaps unsurprisingly, the 31% of firms who define real-time as a second or faster feel more strongly about access to real-time data being very important for smarter business decision-making compared to the rest of the sample (76% compared to 59%). These sub-second pacesetters also feel better prepared with the tools and resources needed to take advantage of real-time data analysis (65% compared to 48%).
“While we’re seeing an increase in both the volume and complexity of data, we also know its value perishes over time. The findings show that many firms could benefit by reducing their data-driven decision-making window,” says Kathy Schneider, CMO for KX. “We have customers across financial services, automotive, utilities and manufacturing that tell us operating at the second or sub-second level is a game-changer for them in terms of improving operational performance and sharpening their competitive edge.”
Also, Iterable’s Mike McGuire reiterates this view: “Consumers are increasingly drawn to brands they feel a strong emotional connection to. Businesses need to use the increasing amounts of customer data available to them and leverage it to create a personalised customer experience. After a year of disruption, businesses need to create an authentic brand experience that goes beyond a sales approach and looks to form a genuine connection with consumers based on empathy and understanding.”
CI&T’s Melissa Minkow also explained to Silicon UK: “Tightening up demand forecasting methods to streamline the supply chain will be absolutely crucial in minimising waste-generated losses. Improved predictive technology will lessen lockdown’s impact on margins, while priming retailers to better anticipate consumers’ fluctuating buying patterns even beyond this urgent situation. In addition to nailing the transactional and technological components, though, retailers would be best served to demonstrate compassion (not in an exploitative way, of course, but in a helpful way). This is an important moment for brands to ask themselves how they can provide real value to consumers.”
The retail landscape has changed out of all recognition. Indeed, this space is still evolving with little site of its final form. However, it is clear that technology – more than at any other time – is playing a pivotal role in the metamorphosis of retail online and on the high street.
Sara Arthrell, global director of Product Marketing, Brightpearl.
Sara Arthrell is obsessed with understanding the challenges facing modern merchants today. Recognised as an expert in the e-commerce space, she’s putting her passion to use as Global Director of Product Marketing at Brightpearl. This innovative SaaS company helps 900+ retailers in 26 countries thrive by automating essential e-commerce operations.
E-commerce and then M-commerce has rapidly evolved. But what’s next?
“Pre-COVID, we saw consumer demands growing and behaviour adjusting, but brands had time to respond to it. They were the ones in control and could often get away with dictating how creative they wanted to be to support this changing behaviour or how quickly they wanted to respond to it. But when the world shut down from COVID, slowly, the control transitioned over to the consumer, almost wholly, and they could no longer afford to move slowly. Instead, they were forced to adjust almost immediately if they wanted an opportunity to survive.
“A lot of them fell short because they lost sight of how powerful the consumer experience was. They acted quickly but without thinking through the ramifications, those changes would cause on the consumer. And there was no strategy involved in considering how their decisions supported the changing consumer behaviour.
“And now, as the world slowly opens back up, these consumers are not ready to let that control go. So, merchants need to figure out how to respond to that. You might’ve thought click and collect weren’t necessary, even though it was pretty easy to implement. You might’ve decided that free shipping internationally wasn’t profitable, despite consumers asking for it on social media. You might’ve ignored the demands of offering free returns, even with competitors already doing so. But now, you see the necessity especially compared to ease of implementation, you can better predict what’s profitable, and you realise you can’t afford to ignore consumer demands.
“With the consumer being at the forefront of almost every decision, it becomes about how to reduce friction in their buying experience and make it easy for consumers to shop from their brand. This means brands need to think about what ‘easy’ means to their consumers and then perfect that experience better than anyone else. And, of course, think about what tools and technology are available to help you execute that.
“In our research, we found that 65% of UK consumers will be buying online more frequently over the next 12 months, with 20% telling us they’re expected to only buy online within five years. However, 25% have been let down by an online order since the crisis started. There’s a massive opportunity, but many responsibility brands have to get the shopping experience right – and our data tells us that a quarter of brands are missing the mark, which has long-lasting and damaging consequences.
“It’s the brands that recognise how important the consumer is and then invest in technology to support their changing behaviour that will win.”
What will the digital retail landscape look like post-COVID-19?
“So often, it’s a crisis that sparks innovation. We saw that happen in the recession back in the mid-2000s where money was tight, and many people were out of work. It was this crisis that ultimately gave rise to more DTC (Direct To Consumer) brands who could cut out the middle-men, so products were easier to get and cheaper to buy. And that quite literally changed the trajectory of our entire industry.
“Over the last year, we’ve seen more of that innovation, especially on supply chains and how brands source their products. It requires a level of diversifying that many merchants never had to consider before. But when the world shut down, and so many brands saw massive interruptions in supply chains, they now realise how important it is to pay attention to how this is done and what the backup plan is if the original or ideal supply chain is interrupted.
“Another area we’ll see impacted is fulfilment. With so many consumers moving online, the pressure that puts on a merchant’s satisfaction is enormous. And at the same time of dealing with this increase in demand, you’re also dealing with growing consumer expectations. They want their product faster and easier than ever before, and they don’t want to pay for that speed or convenience. From there, brands are forced to get creative – if it’s not profitable for them to offer one or two-day free delivery, can they offer a click and collect? This is an especially important consideration because it’s also a way for merchants to compete with Amazon’s same/next-day delivery.
“I want to call out click and collect specifically because we saw it slowly becoming more common over the last few years but still typically reserved for big-box retailers. For so long, it was seen as a ‘nice to have’ with COVID-19 moving that into the ‘must have’ category. But think about how you want to do this.
“Does it involve keeping a bricks and mortar store open where you’re offering click and collect as a new fulfilment option? Or instead, can a brand turn their store into a fulfilment centre, shut their doors completely, except to consumers who are picking up orders. In either scenario, click and collect became the very lifeline many merchants needed to survive in 2020 and will continue to be critical even in the post-pandemic world. Consumers have learned to love such a convenient option even when it’s not necessary.”
How is the technology customers now use shaping the future of commerce in all its forms?
“With so many new technologies developed every day in commerce, the priority becomes not just finding the best solution to fit your needs but also thinking about how easily connected that technology is with each other.
“This concept of “technology interoperability” used to be reserved for more technical verticals. But with so much investment in tech being made in commerce and retail, this is now at the forefront. Every day, we talk to merchants who tell us they have anywhere from 10-50 different technology solutions they use in their tech stack. Everything from subscription technology to eco-friendly packaging upsell options, buy now/pay later extensions, delivery outsourcing, fraud protection, AR technology, shipping partners – each of these solve a particular problem, but how can efficiencies be gained by them all working together? These are the questions that need to be answered as merchants think about using technology now and moving forward.
“And don’t forget about the piece of technology that sits in the middle of your operations? How does it support extensible technologies? Or does it hinder it? Where can you gain efficiencies by creating configurable and automated workflows? So often, the technology that merchants use is way beneath its potential.
“So really think about what you can gain by using complete functionality. When you figure out this piece of the puzzle, that’s when you start seeing customer acquisition cost (CAC) savings – the truest stat that separates the winners from the losers. We’ve recently seen data supporting the value of retention vs acquisition, like improving customer retention by 5% increases profits by 35% to 95%.”
Is developing the omnichannel no longer a priority due to the massive changes we have seen with physical retail stores?
“Omnichannel will forever be a priority because the way people shop will continuously change. While more physical stores are closing than ever before, that doesn’t mean omnichannel disappears – it just means that physical stores aren’t as prominent in fulfilling the ‘channel’ part of ‘omnichannel’. Instead, we’ll see new channels take their place because consumers will still crave and demand choice. It’s just like when we saw the decline of email as the preferred sales tool. While that’s been replaced with things like social media commerce, email didn’t go away completely and, for some brands, remains their top channel.
“In terms of what we see take its place, maybe it isn’t eliminated. Perhaps it’s a version of brick and mortar that satisfies the need for consumers to see, touch and use products before they purchase them but also supports merchants who don’t want to spend massive amounts of money on a physical storefront. That solution could be a popup store in high foot-traffic areas, stores acting as fulfilment centres for click and collect orders, or stores sharing space in small metro outlets.
“There’s also more technology emerging that supports the development of newer channels – voice commerce, text messaging, augmented reality, new social media outlets (e.g. Reels, TikTok) and even in-app purchasing in mediums like WhatsApp or Animal Farm.
“If anything, brands have learned the value of omnichannel through all of this. They recognise the need to diversify their channels in case one of them is suddenly deemed obsolete. And most importantly, it’s a brand’s ability to quickly and efficiently adjust to sudden changes using their tech stack as a tool in that endeavour that is critical for a merchant.”
Do you see a renaissance in the high street as these spaces move back to small, family-owned, specialist retailer as high street started 150 years ago?
“As in other commercial areas, the consumer’s behaviour impacts what’s happening in the high street as well, and new trends will continue to become more entrenched as we adjust to the world’s new normal.
“A recent study goes more in-depth into this prediction, highlighting how consumers will shop, with Brits expected to increase their online spending by more than 40%. As part of that, we also see a shift to more local shopping and a move away from chains. In fact, 63% of British shoppers will shop with local business more over the next 12 months. The world ‘new normal’ suggests that this behaviour will subside as restrictions lift, vaccines become more prominent, and the pandemic ends. But the study reveals that the way things once were doesn’t show any signs of returning.
“As such, we will absolutely see a renaissance in the local high street – the essential word being local. That’s sparked by so much of the world moving into a ‘work from home’ environment, stay at home orders that limit public transportation, and even the emergence of millennial buyers who have an empathetic allegiance to spending their money with more local shops versus big-box retailers, who often offer more sustainable options that the consumer prefers.
“And despite lockdowns being lifted, vaccines becoming more prominent, and maybe an end in sight to the pandemic, data suggests that our local shopping behaviours will not be reversed, with 7 in 10 people who have switched to shopping locally planning to continue those habits throughout the next year. Beyond local shopping being more compatible with what’s happening currently, the world of commerce has shifted. As a result, consumers are most often choosing to either stay home and shop or stay local. In either scenario, it negatively impacts the large city centre outlets massively and most likely, forever.”
If the sales funnel is now disrupted, is X Commerce now about focusing on developing engaging customer experiences, brand advocacy and positive sentiment?
“It’s about building engaging customer experiences that are done right every single time, across every single sales channel – which then help to build brand advocacy, create positive sentiment, and encourage brand loyalty. With many brands out there selling the same or similar products, it’s no longer the product differentiation that gets you seen. It’s the experience differentiation. How will I sell the best product better than anyone else out there? And how will I do that consistently no matter where or how you’re buying?
“Your own store’s reviews sites and your biggest competitors are an excellent place to check yourself on that. What consistencies do you observe? How are they being addressed? What is it that’s earning your biggest competitor five stars? How can you mimic that? In our own research, we found that 77% of poor reviews (1-3 stars) were attributed to issues that happen in the back office. That included things like consumers getting the wrong product or not getting the product at all, dealing with cumbersome returns processes that took too long to process and reconcile, and delayed deliveries that fell outside the guaranteed delivery window.
“A focus on this strategy also supports growing CAC costs because you’re encouraging repeat business by ensuring the first purchase is as perfect as possible. This brings me to my next point – don’t forget about loyalty! 78% of consumers in the US say a loyalty program encourages them to buy more from brands. Subscriptions support the retention mentioned above by boosting not just revenue but recurring revenue. There are several easy-to-implement and incredibly beneficial strategies out there that can almost immediately help boost repeat business. Even better? See if you can adopt a recurring revenue business model and focus on retaining them by personalising each segment.
“It’s these types of operational processes that are absolutely critical in creating frictionless consumer experiences and ultimately growing your brand.”
Focusing on technology, what tools and services should retail business be investing in right now?
“It’s tempting to invest in front-office technology because it’s often the sexier, cooler, more exciting or unique tool that correlates directly to acquisition. And that’s especially tempting with brands who are seeing tremendous success right now because they want to take advantage of the boom in new business.
“But that’s very short-sighted. I remind them that it’s the digital operations that make the difference, especially long-term. The technology that syncs orders with inventory and shipping, so consumers get the right product on time every time, the tools that help you better manage returns and automate fulfilment so you can exceed consumer expectations.
“That’s what matters when you think about the longevity of a brand. Because a better end-to-end experience is what drives more loyalty which ultimately increases customer lifetime value, arguably one of the most critical metrics of a retail business. If you’re only focusing on acquisition, then you risk delivering a poor experience and losing out on the opportunity of any future sales, even if your product is the best out there. And that’s something no brand can afford.”
What are the core challenges all businesses in the retail face as they navigate the next few years?
“The consumer – ha! They are in control. And they can be really fickle or demand at times what feel like impossible expectations. But at the end of the day, it’s the consumer who makes or breaks your business. And while it can feel like there’s a lot of what they do that’s out of your control, there’s so much of what you do that helps lead them where you want them to go.
“And that will not change. Because as we see the emergence of more millennials shopping online, those expectations and demand will keep growing in all areas of commerce. From products to payments, shipping, returns, loyalty and promotions. They will care about every aspect of the buying journey, and the brands that figure this out sooner than later will be the ones who win.
“Where I see brands excel the most is when they offer an improved experience to consumers in an area that even the consumer hasn’t realised could be improved yet. It’s a real innovation that makes them say, “Wow. That was so easy/helpful/fun/better than I thought it would be. I am shopping here again.” I experienced this myself when I was buying a beauty product online just last week and while checking out.
“I noticed they had a new app on their Shopify store that asked if I wanted to make my order carbon neutral’ for an extra $.75. Here was this brand presenting an offer to me – a way for me to offset the environmental impact of my order with a single click – that I had never even considered. Not only did I spend the $.75, but I told three of my closest friends about it, who then bought their product, opting for the carbon-neutral option as well. This is where brands can succeed by not just meeting but exceeding expectations.”
Photo by Ricardo Esquivel from Pexels
Bitcoin price rises towards $100,000, amid investor optimism of friendlier US regulatory landscape under Donald…
Judge Kaplan praises former FTX CTO Gary Wang for his co-operation against Sam Bankman-Fried during…
Explore the future of work with the Silicon In Focus Podcast. Discover how AI is…
Executive hits out at the DoJ's “staggering proposal” to force Google to sell off its…
US prosecutors confirm earlier reports, demand Google sells off Chrome web browser and end default…
Following Australia? Technology secretary Peter Kyle says possible ban on social media for under-16s in…