The late Hall of Fame baseball player Yogi Berra is often quoted as having said, “The future ain’t what it used to be.” When it comes to the retail sector, he certainly proved accurate. Even before the global pandemic hit, e-commerce sales were on the rise. Many pundits note, as a result of lockdowns and store closures, e-commerce sales rushed years ahead of predicted totals. For example, Tom Standage (@tomstandage), editor of The Economist‘s ‘The World in 2021‘, writes, “The adoption of new technological behaviors in response to the pandemic, from video-conferencing to online shopping, means usage has already reached levels that were not expected for many more years.”[1] He adds, “Grannies have discovered online shopping.” With all generations getting more comfortable on the digital path to purchase, most retailers have adapted to this new reality and are pursuing omnichannel strategies.
Brian Straight (@truckingtalk) , Managing Editor at Modern Shipper, reports, “The reopening of many locations in 2021 was expected to boost retail sales, but what may be even more surprising is the continued strength of e-commerce sales. Even as in-store sales have increased, e-commerce sales continue to climb. According to the National Retail Federation, non-store and online sales are expected to grow between 18% and 23% this year over 2020.”[2] Straight calls e-commerce “the Energizer Bunny of retail sales.” Even though many retailers are mastering e-commerce operations, the editorial staff at Consumer Goods Technology (CGT) note, “While it may seem like many of today’s consumer goods companies are becoming pros at their e-commerce acceleration, the truth remains that many brands still struggle to determine their e-commerce value proposition and replatforming strategies.”[3]
The Future of E-Commerce Remains Bright
According to journalist Dan Berthiaume (@DBerthiaumeCSA), the immediate future of e-commerce looks bright because the pandemic still keeps many consumers at home — and they’re bored. He writes, “Rising levels of consumer boredom during the COVID-19 pandemic is having an impact on e-commerce shopping habits. According to consumer poll data from Pitney Bowes, one in four respondents admit to shopping online because they are bored. Broken down generationally, this includes 48% of Gen Z respondents, 38% of millennials, 27% of Gen X, and 15% of boomers.”[4] He explains that the starting point for bored consumers is often social media sites.
This comes as no surprise to Aakrit Vaish (@aakrit), Co-Founder & CEO of Haptik. He notes that sales associated with social media sites and voice-enabled assistants are called “conversational commerce.” He explains, “The term ‘conversational commerce’ was first used in a Medium article by Uber’s Chris Meddina in 2015. Commenting on then-recent developments such as Facebook’s acquisition of WhatsApp, and the emergence of voice assistants like Apple’s Siri, Google Now and Microsoft’s Cortana, Meddina wrote — ‘These and related innovations suggest that “conversational commerce” is growing and concierge-style services may become the primary way in which people transact on their mobile devices.’ It’s been half a decade since that article was published, and conversational commerce is no longer just a shiny new buzzword, but a proven technique for boosting customer loyalty and driving sales.”[5]
Regardless of whether consumers are buying products because they are bored or truly need them, they are finding the convenience of online purchasing to their liking. That’s why most experts believe habits learned during the pandemic will continue into the future. This is true for both the old and the young. As Matt Moorut (@MattMoorut), principal analyst at research firm Gartner, states, “Older people, many of whom were tech-challenged before the pandemic, discovered they weren’t as behind the times as they thought.”[6]
Marketing expert Ray Schultz (@rayschultz) reports the e-commerce boom does have a downside for retailers — consumers are becoming more demanding. He elaborates, “Consumers want faster delivery, added convenience and more interactive live events as the COVID-19 pandemic eases, judging by a new study from Software AG. Of those surveyed, … 34% have greater expectations of fast online retail delivery than they did a year ago — in fact, 70% will choose a retailer based solely on delivery speed.”[7] That’s bad news, at least in the short term, considering the constipated state of many supply chains. Increased customer expectations has companies like Amazon and Walmart scurrying to finds thousands of new employees to bolster their supply chain fulfillment needs.
Maximizing E-Commerce Operations
The CGT staff cautions that successful omnichannel operations begins by identifying the right model for your business. They explain, “For companies still determining the right e-commerce business model, this means resetting expectations of what the market will look like over time. Identifying this new market baseline and its evolution are crucial, as is understanding the impact on consumers, their behaviors and their expectations. Once a company understands the business and operating model implications, it can then determine what really needs to change in order to serve customers and evolve its value proposition — as well as identify where they need to invest from a digital and technology perspective to hit these goals.” The most important lesson to draw from that recommendation is that omnichannel strategies rest on a foundation of data and data analysis.
In the beginning, however, retailers are faced with a “which came first, the chicken or the egg” problem. One of the benefits of e-commerce for retailers is that it creates valuable data about the types of products for which consumers are looking. However, as the CGT team notes, you need some understanding of consumer behavior and preferences in order to determine the right business model. And they note, “Make no mistake, it’s something best done quickly.” Fortunately, most businesses already possess some data with which they can work. The CGT team believes legacy retailers should pave their own omnichannel road rather than try to imitate digital native organizations. They explain, “Legacy CGs may be better off taking into consideration what they can do well — whether that’s the supply chain, store footprint or product assortment — and then really doubling down on that strength. Borrowing an idea from a digital native, plunking it down within a legacy organization, and trying to incubate and run with it is not likely to be a recipe for success.”
Once a business model is up and running, retailers need to take advantage of the data it generates. The editorial team at Analytics Insight explains, however, that this data is valuable only if a retailer understands “how big data works and to what extent it can help their business.”[8] The first thing a business needs to do, they write, is to “develop a big data strategy.” They add, “In simple words, it is a plan, specially curated for your business to help improve the way you acquire, control, store, and analyze big data. Treat it as a business asset and prepare to be amazed by how easily you can understand your consumers!” As they note, understanding is obtained when data is analyzed. Most retailers use some form of cognitive technology (aka artificial intelligence), like the Enterra Shopper Marketing and Consumer Insights Intelligence System™, to obtain actionable insights.
E-commerce is most successful when consumers are understood — and that can be difficult because consumer preferences change all the time. Norman Reyneker, Retail, Sales and Shopper Director at Kantar, insists retailers should not become complacent. “As companies define their future-fit commercial strategies,” he writes, “they also need to challenge some of their widely held assumptions related to the evolving digital retail landscape. Here’s why … The rise of technology has helped shape a new generation of consumers that is more informed, and more powerful, than ever.”[9]
Footnotes
[1] Tom Standage, “New technological behaviours will outlast the pandemic,” The Economist, 16 November 2020.
[2] Brian Straight, “E-commerce is the Energizer Bunny of retail sales,” Modern Shipper, 20 July 2021.
[3] CGT Staff, “Preparing for an E-commerce-Fueled Future,” Consumer Goods Technology, 30 July 2021.
[4] Dan Berthiaume, “A new subset of online shoppers is just looking for something to do,” Chain Store Age, 23 March 2021.
[5] Aakrit Vaish, “The Future of eCommerce,” Datafloq, 5 May 2021.
[6] Lisa Lacy, “Ecommerce Was By Far the Biggest Retail Trend of 2020,” Adweek, 22 December 2020.
[7] Ray Schultz, “Consumers Want More Online Convenience Post-Pandemic, Study Finds,” MediaPost, 28 June 2021.
[8] Editorial Team, “Use E-Commerce Big Data to Drive Better Customer Insights for Retail,” Analytics Insight, 11 August 2021.
[9] Norman Reyneker, “#EcommerceDay2021: Redefining retail – A future view of digital commerce in 2030,” Bizcommunity, 8 March 2021.
