Last year, physical stores were forced to shut and shoppers turned to their smartphones, tablets, and laptops to buy almost everything. Ecommerce boomed, driven by increased volume from existing online buyers but also first-time ecommerce shoppers. In a very short period of time, retailers and brands were forced to make radical changes to their operating models to accommodate new consumer behaviours and support the surge of online demand. It was a huge challenge just to keep essential products in stock and ensure timely delivery.
Now, the industry has to take stock again. Our analysts predict that even with the vaccination programme supporting the reopening of economies and the relaxation of strict social restrictions, ecommerce will continue to accelerate, growing three times faster than all other store-based channels by 2025. Online will provide 57% of global added sales by 2025. But currently, most companies are still mainly focused on the physical shopping experience.
Our analysts say this must change. Brands and retailers cannot afford to continue operating like it is 2010. They must adapt their business and investment strategies to take advantage of ecommerce growth in a competitive environment and support their organisations to take advantage of the new and complex dynamics of digital and omnichannel commerce.
“Absolutely everything is going to change,” says Shyla Killion, Director, Edge by Ascential Advisory, North America, in a webinar we recently hosted on how retailers and brands can empower their teams with the knowledge, tools, and skills to grow top-line sales and bottom-line profits in a new digital era.
If that sounds dramatic, Killion says it’s not dramatic enough. “We often don’t see enough change from our clients; in our industry. They are so used to doing things as they’ve always done them for the past 25 years, even 40 years or longer. Ecommerce is really going to be the channel that will drive the future growth in the retail landscape - and that story, which is a powerful story, is borne out of the data.
She also points to the fast pace of technology innovation, like robotics and automation, that are also influencing new shopper habits and expectations in last-mile delivery and have supported the rise and evolution of delivery intermediaries, which has created new aspects to the retail landscape. “But increasing demand to buy online is the real influencer of all these other developments and so ecommerce must be prioritised.”
“One of the questions we get asked the most from our clients is how do we build the foundations to win in digital commerce,” says Shazia Amin, Senior Manager, Edge by Ascential Insights, EMEA. “It’s such a big and broad question and there is no one size fits all answer. But it reflects the knowledge gaps in the industry, which I’d say is really the biggest challenge in this space. Not a lot of businesses really understand the fundamentals of ecommerce, which is one of the biggest challenges when we work with these businesses.
“Another challenge is to get executive teams to invest in ecommerce upskilling programmes, because it is difficult to really quantify quickly and one of those things to demystify in an organisation.”
In the webinar, Kelsey Regan, Senior Manager, Edge by Ascential Advisory, says the actions a business will need to take will depend on the maturity of digital commerce of the market a brand is operating in - what Edge describes as “retail generations”.
Understanding your market
“We have a framework model of five generations of retail, which categorises the maturity of online demand and ecommerce. Different markets will sit within different segments of this framework and understanding where a brand’s market is in that framework will be a key starting point in the journey to setting a strategy to winning in that market in the future.”
Killion agrees: “There is a huge difference between what is happening in digital commerce in Asia and North America for example, and so understanding the differences is definitely the starting point. That is what we start with when we work with clients. It would be very unfair to approach an ecommerce upskilling programme in Brazil through the lens of the North American market.
“In the first instance, we help our clients access quick but powerful wins. What many of the brands we work with don’t realise is that a lot can be done with little tweaks and slight increases to the level of education in key teams. Then, once there is motivation and appetite to go further, then we can support putting that five-to-10 year foundation in place that will support brands to take advantage of their market dynamics over the next five to 10 years.
“But businesses must understand that without the necessary foundations in place, they will simply fall behind in the ecommerce race as markets mature. They won’t be able to catch up later. We are at a crossroads in retail and what businesses do now will determine their future.”
What could your ecommerce roadmap look like?
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