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PLANNING FOR ECOMMERCE SUCCESS IN THE MODERN BUSINESS ENVIRONMENT

What ecommerce means today?

As we all understand, traditionally, ecommerce has meant the buying and selling of products and services by businesses and consumers through an electronic medium i.e. over the Internet.

However, in the past few years, the boundaries have blurred and the worlds of traditional commerce and ecommerce have been merging.

Ecommerce for many years was considered an interesting trend, but it was treated mainly as an added channel and on the side, largely, of what was happening in the world of commerce. Today the boundaries have so blurred and they have come so closely together, that the on and the offline arenas have more overlaps and very few clearly laid boundaries.

Modern world seems like an infliction point where technology is now so pervasive and so useful that the worlds of commerce and ecommerce appear to have seamlessly merged and everything is omni-channel. Gone are the days when it was only about the phone, or about the internet or about the physical store. Today, it is about all of them. The last few years in particular have been extraordinary in the sense that technology has deconstructed the retail and service delivery industries.

Today, every merchant, every retailer and every commercial service vendor must have an Omni channel strategy or they won’t survive. That is a very different reality than what was the case as short as just 2 to 3 years ago. One can witness this reality in the omni presence of everything online. The internet is now littered with online shops of all sorts, from supply of consumer goods, services, knowledge vending to social engagement etc. With this exponential rise in the global trend to shop online, one could say that the world is going to have ecommerce only. So the question is, does this mobile commerce trend spell the end of traditional stores or service delivery offices?

Contrary to what may commentators believe, the likely reality is otherwise. I believe that the above mentioned possibility is not likely to happen, partly because it seems reasonable to assume that the consumers do not want that future. Shopping is as much about entertainment and engagement as it is about utility. We all like to shop and we like going through the treasure hunt experience which shopping in physical locations offer. However, although retail real estate will continue to exist, it will certainly go through a radical transformation.

It is more likely (a trend which is already shaping up) that stores are going to become as much distribution and fulfilment centres as they are full- fledged shopping experiences.

The stores and malls are going to be highly technology enabled. Today, a square footage in a store needs to attract people through the door and it needs to have the right inventory at the right time, and it needs to have high service levels. That is a very expensive model, and arguably also a very inefficient model.

Transformation of retail real estate

Over the past few years, the successful evolution of retail ecommerce has shown that, particularly down the tail of the value chain, it is a much better a business model to handle everything ‘just in time’. I believe that the transformation of stores and other retail real estate will follow a similar pattern. i.e. They will become technology enabled to an extent that you may end up hollowing out the real estate.

In the modern world thus, the showroom is likely to be a much smaller part of the footprint, and the inventory and the distribution centre become more of that footprint. So I believe that that physical stores will continue to exist but they are going to transform, and it is going to happen faster than people think. In the mature ecommerce markets, within next 24 months, you may see a fundamental restructuring of retail real estate. You may see distribution centres, local economies, technology-enabled shopping, and a very different approach toward how you engage with the consumer.

New reality for all retailers and service providers

Building engaging experiences across channels is incredibly important. Many retailers have spent their entire lives thinking about how to build an engaging experience in one channel, which is the store. But now, understanding how to connect with your core customers across every way they want to connect (not the way you want them to connect but the way they want to connect with you) is a different skill.

Building an Omni channel engagement experience requires design and product management. It requires deep understanding of how to market in a digital world. However, traditional marketing is still very important. In all likelihood, we will continue to see old-school marketing like major TV campaigns and other efforts to get people into the stores. That is still important, and that is not going to go away.

But developing the skills for and understanding how to engage in a world of exploding social networks, how to use big and small data, how to use search, how to catalogue products & services, how to optimize cyber presence and how to enhance engagement experience over the digital landscape are very different skills. I think, mastering these competences is going to become a core part of the playbook for retailers and merchants of all sizes around the world.

Ecommerce is increasingly becoming a data business

Various ecommerce models have distinct advantages. For instance, eBay, proudly claims to have a selection advantage. They claim to be world’s biggest store, and have more things for sale than anyone else. But I believe that such advantages are not sustainable in the long run.

How big and small data will effect the way vendors will seek to engage the consumers?

Data allows marketers to connect exploding inventories, exploding selection (that we are all seeing), with a highly relevant experience for a consumer.

While from a merchant’s standpoint huge and incredible selection may seem a winning factor, from the consumer standpoint it can be overwhelming. In most cases, we probably do not necessarily want to shop in a store with a billion items for sale, as we could be just looking for a specific thing or a limited serendipity experience.

So how do we make a huge choice relevant? Answer lies in the effective use of data as it is the way to connect a long-tail advantage with consumers that oftentimes want simplicity.

It is however easier said than done, but we are starting now, in the industry, to see really good examples of businesses that are using data to their advantage. It’s certainly an incredibly important part of what the big established ecommerce players like eBay, amazon and Uber are trying to do.

The increasing convergence of interaction devices

Since the mobile penetrations skyrocketed in the recent years, the latest trend has been that mobile is a very important channel for engagement. Whilst, it is still true to certain degree and mobile is still very important, there is also a slightly different way to look at it. I think we are already past the mobile tipping point i.e. where mobile is increasingly not a meaningful concept. Only a few years ago there were few people owning tablets and a few more years ago, there weren’t any smartphones. Now we’re very quickly moving to a world where I just think there will be technology- enabled connected screens of all sizes.

Some of those technology-enabled screens may be in a retail location, some of them will be on your wrist and some of them you may hold. As a result, we don’t know what mobile means anymore? I suspect that within nest 24 months or so, in the commercial world no one will have a mobile strategy. They will just have an Omni channel, connected-screens strategy.

How data could be a competitive advantage?

The use of data as a competitive advantage is both art and science. There is a lot of discussion about the science but not as much about the art. Although, complex algorithms could reveal countless behaviour relationships, but the truth seems that judgment still matters a lot.

Any large ecommerce player could create an infinite number of segments and an infinite number of possibilities from the available data, but creating an infinite number of possibilities is not an actionable strategy.

In practice, to drawn conclusions out of data patterns we all use a lot of judgment. We bring quantitative analysis to a certain point and then say, “The right way to look at our customers is this, not this,” even though there are infinite ways we could. All big ecommerce players have people that have a lot of experience in fields not directly related to data management. They have brought people into their data groups that actually did things like ran stores, so they have human insight and judgment. They have brilliant mathematicians who can run regression with the best of them. And somewhere in that mix they are creating actionable insights, which is the only thing that this is about.

Big data is not everything

Big data is very good as it represent large groups of people and large behaviour sets. However, It is not about big data alone, it’s about small data as well. In the world that we mentioned before, success is about a vendor connecting with a potential consumer in a way that is relevant and does not feel intrusive, does not feel creepy, and does not feel artificial.

It is about understanding insights that a vendor can glean about the consumers. Insights which could enable inspiration and which could create and predict demand with accuracy.

The future

Ecommerce has historically been incredibly and heavily search based because it is fulfilling a utilitarian function. i.e. One is very clear about the need, knows exactly what he/she wants. The need is searched over the search engines or particular marketplaces which are trusted by him/her. If the item (or service) is found, it is bought. On the flip side, physical stores have had an important element of serendipity. For instance, you go to the store because you kind of want a shirt, but you are not exactly sure what shirt you want and you would like to browse. Let us make no mistake, the inspiration matters, particularly in emotional categories like fashion.

The future of digital commerce is trying to get the best of both. Search is still very important to all successful ecommerce players. But as create collections of beautiful item, they are also trying to spur inspiration, and they are trying to spur imagination. They are trying to capture some of what happens in stores, which is, “I went into a store to buy a shirt, and I also bought a pair of pants. Didn’t know that I wanted it.”

For all ecommerce, you can say that it is still early days, but there is no reason that digital shopping cannot be both utilitarian and inspiring, and I think that it is the next wave. But to achieve that, data alone is not the most effective tool. With todays technology, data tends to narrow consumers toward what they want. However, it is yet not great at inspiring the consumers as to what they may not have known they want, but they do after they see it.

Understanding the ecommerce success factors

In the prolonged introduction discussion so far, we have used the examples of goods retail ecommerce, simply because it is easiest for us to relate to it. Most of the successful ecommerce brands like eBay and amazon belong to that category and capture our imagination as soon as we think about ecommerce.

However, the entire discussion relates as much to the service sector as it relates to the goods retail industry. Not only we will continue to see an exponential rise in the specific service vending ecommerce companies like Booking.com or Uber, the traditional service providers like your local travel agent, your health provider or even your community gym will also have to focus on the Omni channels to engage, automating several aspects of their service delivery and provision of value adding services. We are likely to experience the similar blurring of boundaries in the service delivery industry as we are witnessing with goods retail.

In all economies around the globe, service ecommerce companies will continue to come and go. Certain categories of service (for instance airline tickets and hotels reservations) will probably sustain to be ecommerce only whilst the others will adopt more comprehensive Omni channel engagement tools and practices.

About the Author and the Organization

Kashif (the author) is a world-class finance & business professional having over 20 years of diversified experience of working across the globe including United Kingdom, Switzerland, Netherlands, Saudi Arabia, United Arab Emirates, State of Qatar and Pakistan. He advises few of the top ecommerce companies based in Middle East on business strategy.

Advanced Corporate Solutions is a Business Consulting, Business Management Technology Services, Human Capital Management and Business Process Outsourcing company.

The author co-founded this company in the year 2011 and since then have grown it to a level where it operates simultaneously out of five countries. Managed by a group of seasoned business, finance and information technology professionals, it synergises modern business management skills, in-depth business analysis, performance management and financial reporting expertise with cutting edge business management technologies to help its clients become high performance businesses, across all industrial sectors.

Serving clients in three different continents through its strategically located delivery centres, ACS has true global footprint and delivery capabilities...

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