Long Read - The ecommerce evolution

Paige Murphy
By Paige Murphy | 13 August 2021
Credit: David Veksler.

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An accelerated move to digital has seen consumer expectations dramatically heighten, leaving many businesses to re-evaluate commerce models and put a renewed focus on the customer experience.

The global pandemic’s mass disruption to the way society shops and interacts with brands has catapulted the world of commerce further into the digital abyss than it has ever been before. And now there is no turning back.

Worldwide retail ecommerce sales grew 27.6% during 2020, for a total of US$4.280 trillion, according to eMarketer’s “Global Ecommerce Update 2021” report. Meanwhile, total worldwide retail sales declined by 3%, to US$23.839 trillion.

While ecommerce growth is still expected to slow this year after an abnormal year last year, growth is still on the agenda. The forecast for worldwide ecommerce growth in 2021 is pegged at 14.3%.

Groups that were still not avid online shoppers have been converted, and businesses that relied on traditional bricks and mortar stores have had to rethink their models.

At beauty retailer Mecca, a business that had an online store but also relied on its traditional bricks and mortar, the focus on digital was accelerated dramatically.

“We have heavily accelerated our focus on digital over the past 18 months concentrating on improving engagement through amplified content, live-streaming and enhanced live chat options; developing a stronger omni-channel offering with click-and-collect and an exciting new digital product (that’s still a secret!) coming to market soon to bridge the gap between digital and physical experiences; and doubling down on personalisation and relevance across all touchpoints for the customer, to make shopping with us on any channel as seamless as possible,” Mecca Brands chief digital officer Sam Bain tells AdNews.

Customer experience (CX) has been spotlighted among businesses across every sector as consumers become more dubious of where they purchase from. With anyone now able to set up shop online, competition is at an all-time high, making the experience of shopping with your brand one of the most important components to consider.

AKQA Sydney managing director Rakesh Rachamalla tells AdNews COVID-19 has led to a “seismic shift” in consumer adoption of new technologies.

“[They’re] adopting whole new customer behaviours, and this is not just in traditional early adopters — we’re talking the majority of Australians,” says Rachamalla.

“What we’re seeing is a good majority of customers — if not all customers — have formed habits that are likely to remain for the foreseeable future, and this presents further evidence for the fact that brands need to continue to invest in CX because consumer expectations have increased further.”

Standards and differentiators

After years of sitting on the backburner, CX was propelled into the list of top priorities for brands. The meteoric rise of consumers interacting with businesses online has set new benchmarks, leading to CX’s renewed importance.

“CX is becoming a huge part of the business portfolio,” says Tim Lavelle, senior director, CX apps, JAPAC at Oracle.

“When you think about CX, it’s not the marketing platform or a content platform, but customer experience as its true format is making sure we’re having the right conversation with the customer at the right time, in whatever channel they want to have it on.”

The spotlight on CX comes as research continues to point to its link with revenue growth. According to research by Forrester and commissioned by Sitecore, each one-point improvement in a firm’s CX score drives millions of dollars of incremental revenue.

Adobe’s Digital Trends Report also points to CX leaders as having the ability to prove the value of marketing through real-time customer insights and attribution.

“In many ways, the pandemic proved the customer experience proposition,” says Adobe vice-president of marketing APAC Duncan Egan.

“Companies that were already exploring and investing in new tools and processes for optimising customer experience prior to the pandemic were in a more advantageous position than those who hadn’t. They were able to adapt more quickly to remote work and digital service delivery and rapidly innovate to redesign the customer journey.”

The experience customers have is key to their retention and many are even willing to pay more for it. The CX Trends Report 2021 from Zendesk revealed that 75% of customers are willing to spend more to buy from companies that give them a good customer experience.

As the on-demand economy continues to grow, fast and friendly service is now expected by customers when shopping online, with 65% of customers wanting to buy from companies that offer quick and easy online transactions.

Beyond that, they want a brand to show empathy, know their tastes and preferences and also align with their values. For example, 63% want to buy from companies that are socially responsible and more than half (54%) want to buy from companies that prioritise diversity, equity and inclusion in their communities and workplaces.

Egan says empathy and trust are central to the next evolution of CX in a post-COVID-19 world.

“Today, empathy is an underutilised differentiator, but it is accessible by understanding the areas of friction in the customer journey and customers’ motivations to improve the experience,” he says.

Getting the foundations right

Just like anything being built, foundations are the core stabiliser that hold it together. Without them, everything can come crashing down.

“CX is a first step to simplify how we engage with customers in whatever channel that they choose to engage with,” says Rachamalla.

“To do truly great CX, you need to be looking at what the brand stands for. Now the baseline for CX is shifted up higher. So, of course, now every brand has a good digital storefront. Every brand has the ability to engage with customers digitally for customer service and enquiries.”

He says the brand experience is a key differentiator for those looking to remain competitive in the market. To move into this next phase, though, means brands need to have all the foundations in place.

In this new world of CX and commerce, and with the impending deprecation of third-party cookies, customer data platforms (CDPs) are becoming more important than ever for marketers to house their own first-party data and build out personalised experiences in privacy-compliant ways.

“If you don’t already have a customer data platform, it may be time to invest — a CDP enables brands to create and then execute from aunified customer profile,” says Egan.

“Brands that don’t already have much first-party customer data should focus on creating a robust first-party data strategy that includes obtaining durable customer IDs with marketing
consents attached.

“To obtain these, brands need to offer something of value in return. This could be compelling content, personalised recommendations, discounts or gamified features.”

Sitecore president, commerce, Mark Johnson says with increasing consumer expectations and demands, the onus is on brands to deliver personalised experiences.

Integrating CDPs, customer relationship management (CRM) software and other components of marketing technology stacks into the digital platforms of a company will all help with delivering a personalised experience for customers. But this is easier said than done.

“Brands require massive amounts of data, technology, and expertise if they are to support marketing and IT teams to continuously build easy, effective and seamless digital experiences,” says Johnson.

“This requires executive support to connect the data silos and empower or recruit the right people.

“Marketers who have relied too heavily on third-party platforms to optimise in the acquisition phase need to be educated about the first-party data they have, and how it connects to their own platforms, to find the quick wins.”

A new supply and retail model

Ecommerce has been completely transformed during the past year. The focus has shifted to having an omni-channel approach in order to connect with customers wherever they choose to shop.

Peter Davias, senior manager — digital strategy lead at Accenture Interactive ANZ, coins this as “headless commerce”.

“You need to think about shopping being embedded in every single touchpoint,” he says.

“The idea of just opening up a laptop and shopping on a website is ancient. Shopping is everywhere and has to be plugged in everywhere.

“This headless commerce experience that we’re talking to clients about now is around how do they move from this state of really pieced together architecture and breaking that apart and creating a front end on top of their commerce that allows them to plug into all of these channels.”

Meanwhile, in the back end of the ecommerce world, the supply paths in which brands are taking to sell their product are also dramatically changing. More brands are choosing to sell direct-to-consumer (D2C).

Davias says the trend towards D2C has been influenced by the ease of setting up a shop and proliferation of channels a brand can sell through direct to the customer.

“Previously there was a proxy in between, which is a retailer or a wholesaler, but nowadays the brand and the manufacturer are now dealing with the customer,” he says.

Dealing directly with the consumer is one reason Alpha Digital commercial director Tobey Bower sees CX as becoming more important for many brands. D2C presents the opportunity to get to know the customer and what they want even more than they previously did, and with bigger margins.

As a result of this trend, he says the role of the retailer has come into question. He points to other trends that also question this role such as brands opting to sell through influencers across social media.

“When an influencer can stock in their store a range of products from different brands, I’m not sure what the distinction between an influencer and a retailer is,” says Bower.

“They become a retailer. They have a brand and they sell a range of products from other brands.”

Ultimately though, Bower says the decision to supply direct or through an influencer or retailer comes down to the brand’s strategy.

The shopping mall’s makeover

The proliferation of channels for brands to sell their products in has seen a new iteration of the shopping mall. The rise in marketplace options and social commerce have become ways for consumers to browse and “window shop”.

With every business able to become a commerce business — even those that weren’t traditionally considered to be — Davias says marketplaces have become popular choices. They alleviate many of the back-of-house pressures that come with having one’s own ecommerce store.

For Davias, social commerce further plays into the notion of headless commerce.

“If you’re leading ecommerce in an organisation and you’re focusing on your website, your mobile, your mobile app, it’s just another channel that you need to light up,” he says.

All of the social media and tech giants have begun to ramp up and invest more in their commerce offerings.

Facebook just announced an expansion of products which will soon be made available under Shops. This includes the expansion of Shops into its other channels such as WhatsApp and Marketplace, the introduction of “Drops” and live-shopping events. Augmented reality (AR) and artificial intelligence (AI) are being trialled to give options for customers to “try-on” products virtually and use visual search to find similar products. Ads will also become shoppable with product tags and Facebook will use its knowledge of the shopper to send them to where it thinks they are most likely to make a purchase.

The announcement of these new products come as Facebook says it has more than 300 million monthly Shops visitors and more than 1.2 million monthly active Shops. Facebook expects this trend to grow, with 32% of shoppers globally saying they plan to spend less time in-store after the pandemic.

Kate Box, director, global business group, retail ANZ for Facebook, says brands are no longer just fighting for discretionary dollars, but also discretionary time.

“That discretionary time is harder,” she says. “They want to win one of the 10 x 10-minute shops that we now do on our mobile phone.”

Facebook’s move to spend more on its shopping features is moving the social media giant and its other brands into a new era for social media. Box compares the move to becoming the “Westfield” of the digital world.

“Pre-pandemic, you still had boards and C-suites thinking of online as purely about convenience, the shopper knows what they want, we want to make it easy for them to find,” she says.

“What Shops has helped do is for them to realise it’s too reductive to think about online purely as a place for people who already know what they want.”

Similarly, Pinterest has expanded its shopping features and made more of them available in different markets. It recently brought some of the features Down Under, allowing users to shop from Pins, on boards, from search, and through the Lens camera search. Users will also be able to get inspiration from Shopping Spotlights which showcase expert recommendations and trends from fashion and home influencers and publishers.

The expansion comes as Pinterest reports that the number of users engaging with shopping surfaces on the app grew more than 200% during the past year.

Pinterest head of shopping product Dan Lurie says the move was a natural progression for the platform which has always been a source of inspiration for customers looking to buy a product. He says the new features make Pinterest a lot like a traditional marketplace.

“On the merchant side of the house, we’ve rolled out the verified merchant program internationally which hand vets merchants to ensure they’re going to provide a good experience for our shoppers,” he says.

“We want to start from a place of trust so we made sure they need criteria for things such as a clear shipping policy, clear return policy and that they’re selling what they actually say they’re selling.”

Once through the process, Pinterest helps brands set up a “storefront”. Brands can upload their “catalogue” of products to be displayed throughout all of Pinterest’s various shopping surfaces.

The features for brands are completely free to use and purchasing doesn’t happen within Pinterest. It instead directs shoppers back to the brand’s own channel with Pinterest not taking a cut.

“Our users have a very upper funnel inspiration mindset,” says Lurie. “Our goal has been to connect them to the products to help bring that inspiration to life. We’ve started to make it easier to compare and evaluate those products [to] make sure you’re finding the one that’s right for you. But ultimately then we send that traffic to our merchant partners and the checkout happens on a retailer’s page.”

If a brand wishes to increase its reach on the platform, this then becomes a paid feature which Pinterest offers through setting up a campaign.

Traditional meets technology

Brands are finding use cases for technology such as AI and AR in the shopping experiences they deliver on their own channels.

Oracle’s Lavelle uses Kmart as an example of a brand using AR well through its online store. The retailer has been using the technology to place products in situ so shoppers can view it within the home.

When it comes to using different technology in an ecommerce strategy, Lavelle says it is all about context. Conversational commerce has quickly found its place in the CX world with chatbots becoming introduced as a means to scale customer service.

While Lavelle believes voice channels are set to take off, Davias believes the technology is best left for basic macro tasks for the moment.

“I think all these technologies, they all come in and everyone jumps on them because it’s the new hot thing,” says Davias.

“Everyone wants to have the first Instagram Shop and to have the first shopping experience on an Alexa device. Then all the brands try it, and realise that’s not actually the new revenue stream they hoped for.”

He says it will be a few years before these new technologies mature and become embedded in consumers’ lives enough to see any financial benefit to using them.

Even as the world goes back to some shred of normalcy, digital purchasing behaviours are here to stay. This leaves brands with an offline presence needing to find ways to connect it with their online presence in order to deliver the personalised experience customers now expect.

While the jury is out on which brands have done this well, most point to the tech giants and the banking and financial services industry as leaders in the space.

Things such as loyalty programs that offer a meaningful value exchange and click-and-collect services are some ways brands are making a connection. The resurgence of QR codes also continues to present new and creative opportunities to connect the online and offline worlds.

“Marketers should investigate how they can use these and other methods to connect their offline experiences such as in-store POS (point-of-sale) materials to their main digital channel,” says Sitecore’s Johnson.

“Always be looking for ways to draw the customer back to your site at key points in their journey.”

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