The Era of eCommerce

Amy Hertsenberg
July 11, 2017

Online retailing continues to gain ground at the expense of traditional retailing. Retail stores are closing at a high pace. Departmental stores like Macy’s, Kohl, Sears, and JC Penney’s are struggling on High Street, while the likes of Amazon are hitting $1,000 /share and Walmart e-commerce rose 63% following their marketplace overhaul and the acquisition of the likes of Jet.com.  According to Internet Retailer, e-commerce growth was at 15.6% last year, with online retail sales representing 11.7 percent of total retail sales (excluding cars and fuel).  Furthermore, Internet Retailer says total eCommerce retail sales — factoring out fuel, automobiles, restaurant sales and bar sales from the Commerce Department’s report — accounted for 41.6% of all retail growth (of $3.375 trillion in 2016). 

These events highlight the importance for retailers to follow the customer in their spend and focus on becoming a truly seamless organization. I am purposely avoiding the word omnichannel here, as this word often creates a ‘them and us’ kind of behavior, which will ultimately impact the customer negatively.

Every retailer talks about ‘putting the customer first’, but I have seen many examples of where this is not the case. Many stores have a ‘convenient’ customer pick up at the back of a store with the thought that customers might be tempted to pick up other items on their way over.  Although this might be a good business proposal, it is not putting the customers first and ultimately many will walk away and never return. Offering pick up and or deliveries at times convenient for the business and not for customers will also lead to dissatisfaction.

The thinking in the retail industry must shift and accelerate to become truly customer focused rather than today’s model, which primarily is focused on what the business is prepared to offer based,their internal capabilities, and/or their operationally sensible solution.

The mindset of retailers needs to be rotated to ensure their offers are truly convenient for customers, while determining how to make it work both in terms of execution and profitability. That’s a 180-degree change in thinking for retailers, which they are not used to. Most traditional retailers know exactly what the ROI is when opening a new store, but with online retailing this becomes much less certain.

Retailers should, however, consider what it means if they don’t invest in creating that seamless online customer experience versus one that is well embedded in their existing organization. There are numerous examples of businesses having to shut down completely as a result of being either too late to the party or executing the offer extremely badly based on current practices. When executed well, however, customers will become loyal and spend a bigger wallet.

When deciding to enter the digital world it’s important to embrace this completely and make sure to understand that it will affect people, processes and technology. Obtaining the right resources to facilitate the change is critical.

From a people perspective, you must assemble a team that knows what it means to develop, deploy and operate an e-commerce offering. Learning agility, communication, and customer experience are paramount skills.  Resources that can work well to drive incremental releases and drive continuous integration and deployment work best.  Business acumen of how to drive customer “stickiness” is also critical.  Building a team with these critical skillsets can be achieved via direct hiring, consultants and other partners. Integrating the offering and become truly seamless within the business becomes their definition of success. This change is very uncomfortable for the more traditional people in the business, but it’s of major importance to integrate these change agents resources to complement existing strengths and become successful for the long term. It takes years to build these teams internally, thus the need to find the right partners who have that experience to jump start the process.

Technology is also a major enabler that must be maximized for effectiveness and customer experience. Not only must the retailer build a digital platform, they also need to integrate with their legacy systems and employ more rapid integration and deployment models. In terms of the digital platform, larger organizations often make the mistake of wanting to build everything and deliver changes on a monthly/quarterly basis. The thing to consider, however, is how much knowledge  your organization has about the subject/product and can they stay at delivering capabilities at pace with the continuing changes in demand from customers. The use of off-the-shelf solutions must also be examined. Building your own internal pay online functionality, for example, requires a lot of expertise.  I have seen this development take more than 1.5 years and still not work well for customers. Knowing that there are solutions available that could have been up and running within months, which ultimately would have been cheaper and much faster to market. As for the integration to legacy, there are new solutions on the market that offer innovative approaches to data management, allowing for a single, fresh, holistic and easily accessible view of corporate data to the new digital platforms.  Enabling technology requires a focus on the customer experience (UI/UX), real time integration to mission critical application data, and the ability to nimbly introduce new offers, marketing approaches, and extensions to your brand.

Demand for customers is changing rapidly. Retailers need to keep up and view this as a game of chess – one in which they must think at least 3 moves ahead.  Initially, customers will be excited receiving an order in 2 days or even the next day by just clicking and driving to the store.  This excitement will cease quickly, however, and competitors will start offering additional services at a more rapid pace. With that pace of change in mind, it’s important for organizations remain agile, be acceptance of change and look at what’s available in the market in order to remain ahead of the curve.  Customer journey mapping and enablement of User Stories and Epics leveraging agile principles truly helps to highlight roadmap and prepare a meaningful backlog of work to drive future success.

In summary, retail is an exciting and dynamic period. Augmenting your team with the right talent and technology/operations skills can best prepare your organization for the journey ahead.  Agile principles, customer experience, mobile enablement, and technology enablement are key.  Simplification of current process flows, as well as introduction of new business models, will drive user adoption and increase agility.  These business models will continue to create new retail constructs such as Cyber Monday and Amazon Prime Day.  In a world where eCommerce growth is accelerating at a phenomenal rate, it is time to act and ensure your seat at the table .

http://marketingland.com/report-e-commerce-accounted-11-7-total-retail-sales-2016-15-6-2015-207088

 

 

 

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