Part 2: How Retailers can Navigate the eCommerce Economy
With so many mixed economic signals, as well as consumer shopping patterns and 2022 eCommerce trends falling back in line with pre-COVID norms, how do eCommerce retailers prepare for the future? In case you missed it, in my previous post, I talked about how investing in composable commerce technology during uncertain times can help differentiate businesses, starting with the catalog.
While investing further in technology during a downturn sounds counterintuitive, a recent McKinsey report talked about why that’s a winning strategy. Per McKinsey’s research, most U.S. consumers (75%) have been researching and making purchases in both online and brick-and-mortar stores. One specific passage from the report resonated with me, based on what I see from our customers every day:
“Winning in e-commerce is not about optimizing the current business to play in a digital world. It instead reimagines business through an omnichannel-first lens. In everything from commercial decisions and processes to talent and human capital management and data, on-the-margin tweaks to the existing operating margin do not create winners.
While the channels and platforms 'of the moment' might be clear today, the digital world is a moving, ever-evolving target. Winning in this space will require more than executing successfully in opportunities today; organizations must leapfrog the competition by being nimble and digital-first. Companies that fail to make digital an organization-wide priority across every function put their relevance, profitability, and market share at risk in the near term.”
The good news is that reimagining your business through an omnichannel-first lens isn’t as difficult as it sounds. Composable Commerce architectures help you move fast enough to reimagine the parts of your commerce experience that differentiate you from the competition. The commerce catalog is a perfect place to start.
Let’s look at some of McKinsey’s recommendations from this report, and how you can put them into action today.
1. Play strategically in the right channels
Recommendation: “Consumer goods companies need to be where their shoppers are; as new platforms emerge, players that can embrace them rapidly will be best positioned.”
Our take: From TikTok to live commerce to Web3, consumer preferences ebb and flow. Taking advantage of the latest content distribution channels is a matter of being nimble enough to start quickly, test and learn. Not every channel will be right for you based on your audience and where they spend the most time online.
Fundamentally, legacy commerce systems and ERP platforms don’t enable this type of experimentation. It can be challenging to justify the sheer time and resources you need to mobilize your development team to run a campaign or set your brand up to process transactions directly within an emerging channel. This is especially difficult if the channel doesn’t prove its ROI.
A flexible, modular commerce catalog can make it much simpler to get up and running in emerging channels – delivering newfound agility without having to reinvent the wheel every time. Decoupling the product catalog makes this possible by isolating each component of the catalog into its own set of separately managed microservices (vs. cumbersome legacy ERP system integrations).
2. Use analytics within your commerce platform to drive smarter decisions
Recommendation: “Gone are the days of gut-feeling-driven decision making across merchandising, pricing, promotions, assortment, and content online. Execution decisions will be made based on granular insights to drive outsize growth.”
Our take: One of the strongest ways to differentiate your omnichannel customer experience is to use data and analytics to drive smarter decisions. Having end-to-end customer data allows you to create a better, more personalized user experience across consumer and business marketing channels.
Using a solution like EP Product Experience Manager (PXM) gives you visibility into your product data, price points, geos, channels, bundle combos, payments, orders and more. Merchandisers can feed this data into their analytics engine of choice to create user journeys and merchandising bundles that increase average order volumes (AOV), improve customer satisfaction, and drive repeat orders.
EP Product Experience Manager (PXM)
Merchandise Every Unique Product Experience, Without Custom Dev WorkGo to EP PXM
3. Rely on your in-house technical talent
Recommendation: “Foundational digital literacy and analytics capabilities are critical enablers in achieving a long-term competitive advantage in e-commerce. Doing so requires in-house proficiency of technical talent, tools, and capabilities.”
Our take: Many eCommerce retailers will continue to rely on external system integrators to set the commerce strategy. That trend isn’t going away. But, with a rise in composable architectures, in-house teams can take on the task of day-to-day, agile commerce implementation. Composable (API-first) commerce allows most changes to take place easily and can be built or managed in-house.
As Twilio CEO Jeff Lawson put it, “In order to differentiate yourself in the mind of your customers, you MUST be building. By definition, you cannot buy differentiation: the only way to have differentiation is to BUILD it. Companies that can adapt most quickly to the changing needs of consumers will be the ones that survive.”
Building has never been simpler. With our Composable Commerce offering, Elastic Path Commerce Cloud, we are building tools such as reference architectures, pre-built integrations, pre-configured payment gateways, and pre-composed solutions to shorten implementation timelines and complexity. This enables developers to unlock their creativity, rather than slog their way through drudgery.
Having an advanced starting point and a core set of integrations will increase the pace of change and help teams focus on areas that propel the business and deliver results. Investing in an in-house team of citizen builders can make it easier to play strategically in the right channels, and leverage data to continue building brand loyalty by improving the customer experience.
To sum up, reading the tea leaves of consumer spending and economic trends is rarely straightforward. Smart commerce leaders know that investing in the right technology can prepare them for the future – regardless of the latest channels where customers spend their time and money.