Uncovering New Levers for E- commerce 2.0
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The retail and E-commerce industry is growing at an unprecedented rate driven by the increasing use of devices such as smartphones and tablets, and easy access to the internet. The new generation of consumer is always 'online' and seeks richer experiences and greater convenience. The traditional brick and mortar retail industry is also striving hard to draw customers to their stores and compete against online retailers adopting the ‘brick and click' model.
The levers for the new path for e-commerce can be derived from the key requirements that drive the digital requirements of today:
1. Understand digital shoppers rapidly evolving needs and behaviors
2. 'Social Apponomics' are re-defining online customer experiences
3. Harness the power of the online communities/social media
4. Drive performance with behavioral targeting (best supported by mobile)
5. Keep customers engaged across channels via mobile and LBS
6. Retain customers through multi-channel loyalty programs
The e-commerce ecosystem is evolving rapidly and thus going forward, focus on these 3 levers would be required that can help e-commerce companies uncover new growth avenues from these digital requirements:
1. The empowered customer
2. Technology Disruption
3. Evolving business models
The Empowered Customer
Fueled by the explosive growth of the sector,the new age e-customer has a plethora of choices and experiences. The entire customer value chain has undergone drastic changes Aditya Rao with enhancements happening at the search, comparison stage, selection, payment and post buying stage.
"Strategies will have to be in line with changing consumer behaviors and preferences to create richer and more engaging experiences"
To stay ahead of the game, companies will have to evolve themselves to understand their end-consumers, their behaviors and pain-points. Strategies will have to be in line with changing consumer behaviors and preferences to create richer and more engaging experiences. This will require organizations embed the ‘customer first’ mentality deeply into their DNAs.
Technological advancement is playing a major role in shaping the future of the sector. Be it creating unique and personalized experiences or developing solutions to monitor and automate supply chain, companies are investing heavily in various technologies. To effectively leverage technological advancements, E-commerce players will have to determine the level of investment and the trade offs in other investments to ensure proper strategic fit of technology for their business. At a high level this decision can be based on the following 2 parameters:
1. Business impact: The ability to create efficiencies that will yield the greatest gains across the organization
2. Readiness: Time to attain full readiness
Based on these parameters, following 5 technologies have shown good promises for fueling the ecommerce industry into a new age of revolution:
• Internet of Things: IoT will drive a high business value as it secures proprietary consumer data to create personalized experiences in connected stores, and delivers cost efficiencies in inventory-management. It will revolutionize the overall experience for the consumers, providing insights based on the data collected.
• Automation: Automated vehicles/drones will bring cost savings from long-haul trucking of goods and last-mile delivery. These developments will also increase utilization, make deliveries faster and improve road safety.
• Artificial intelligence: Artificial Intelligence coupled with machine learning can increase revenues through a deeper understanding of consumer behaviour, while saving costs associated with supply chain optimization. In-store pricing and assortments will be optimized and, when combined with predictive recommendations, will clearly benefit consumers and the organization itself.
• Robotics: Robotics will drive cost savings through operational efficiencies, primarily in warehousing and distribution. Software bots can also work faster to complete simple and repetitive tasks. Robotics will enable higher utilization, greater flexibility, improved accuracy and faster transaction times.
• Blockchain: Global E-commerce summit 2017 focused on the use of cryptocurrencies along with blockchain as the future of online payments. Blockchain will enable companies to perform high-volume transactions, reduce costs, increase transparency with increased security and revolutionize the buyer, seller and marketplace network through the transaction technology.
Evolving Business Models
Over the past five years, new players with different models, fuelled by emerging technologies, have challenged what and how goods and services are consumed, disrupting the industry's demand and supply sides. For traditional retailers - both offline and online - there are key elements in these transformative models that could be merged with current business models to better serve the needs of the consumer and reach the next frontier of e-commerce.
Four new business models, in particular, show the strongest potential to take the retail and CPG industries to the next level. These four business models are directly related to new models of consumption that have emerged over the past three to five years:
1. Next-generation Sharing Economy (rental and secondary markets): Renting out products in a fraction of the retail price
2. Behavioral Targeting (BT): BT will allow improving online UX by providing personalized product recommendations, content, search results, site layout/ navigation and navigation options. BT will also help gain customer insight through more robust knowledge of customer shopping and purchasing behavior; this can then be used to improve direct marketing efforts
3. On-demand Economy: Quick delivery of products/ services and automatic replenishment based on consumption patterns
4. Services Economy: Service offerings replacing a basket of products
In summary, for future growth opportunities to be realized, the ecosystem will have to embed the culture of collaboration into their organizations. Instead of being rigidly focused on a specific product or service, ecosystems will draw together mutually supportive companies from multiple industries that collectively seek to create differentiated offerings and capture value they could not reach alone.